Reasons Why Credit Card Application Rejected

While credit cards are a great way to make purchases, it is important to apply for them properly to ensure your application is approved quickly. Even after filling out everything with care and precision, it is possible that your credit card application might get rejected. One of the most common reasons why the application for an unsecured card may get rejected is having a low credit score. Others include a high credit utilisation ratio, incomplete application, and more.

Let’s discuss the top reasons why your credit card application might get rejected.

Insufficient Credit History

Insufficient credit history is the most common reason for a credit card application being rejected. Credit card companies consider your credit history to determine your creditworthiness and the likelihood of making timely payments. They assess if you are a high or low-risk borrower. You can start by applying for a secured credit card such as an FD credit card to establish a credit history. By using credit responsibly and making timely payments, individuals can slowly build up their credit history and increase their chances of approval for credit card applications in the future.

High Credit Utilisation Ratio

The credit utilisation ratio is the percentage of a person's credit card balance in relation to their total credit limit. A high ratio makes you a high-risk borrower, impacting your credit score and ultimately leading to rejection. Usually keeping a credit utilisation ratio of less than 30% is considered good. You can consider repaying your balances or requesting a credit limit increase to bring your ratio within bounds. A lower utilisation ratio can lead to a higher credit score, thus increasing your chances of approval for future credit card applications.

Low Credit Score

Your credit score is a crucial factor in determining the approval or rejection chances of your application. A high credit score increases your chances of approval, whereas a low score may lead to rejection. To improve low credit scores - pay off outstanding debts, make timely repayments on existing credit accounts, and keep the credit utilisation ratio low. All of this might take time, but being consistent surely helps in getting your credit application approved with ease.

Also Read:Understanding Credit Card Billing Cycle & Timely Payment

Mistakes in the Application Form

Your credit card application can also be declined because of mistakes while filling out the application form. Even minor mistakes, such as a misspelled name or incorrect address, can lead to an application being declined. While filling out your application, include all your sources of income, as a low income may also lead to rejection.

Too Many Credit Inquiries

If you apply for a credit card, the number of credit inquiries made by the issuer may affect your application. If you have too many inquiries within a short period, it may indicate that you are seeking credit from multiple lenders and may be considered a high-risk borrower. As a result, your credit card application may get rejected.

To avoid too many credit inquiries, you can limit your credit applications and only apply for a credit card when necessary. It is also recommended to space out applications over time to reduce the number of hard inquiries within a short period. By doing so, you can increase your chances of getting your credit card application approved.

How to Ensure the Approval of Your Credit Card Application?

To ensure your credit card application isn’t declined, consider the following.

• Review your credit score. If you find any discrepancies, get them rectified.
• Be careful of the information you provide in your application. Remember to include all your sources of income and double-check details.
• Another important factor is to choose a credit card that aligns with your credit profile and financial needs. Some credit cards require a higher credit score or income level, while others may have higher interest rates or fees.
• It is also important to use credit responsibly once approved for a credit card. This includes making timely repayments, keeping credit utilisation ratios low, and avoiding excessive spending.

Also Read: Best Ways to Use Credit Card

Conclusion

A credit card application can be rejected for various reasons, including insufficient credit history, high credit utilisation ratio, low credit score, mistakes in the application form, and too many credit inquiries in a short period of time. By taking the steps mentioned in this article, you can improve your credit score and increase your chances of approval when applying for credit cards.

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