Reasons Behind Credit Card Rejections
Credit cards are popularly known as plastic money and these are one of the most popular means of paying for the transactions. The ‘buy now pay later’ concept of the card makes it quite attractive. If any individual has a shortage of cash can also use the card for making transactions.
Credit cards also allow you to pay the minimum amount due and pay the remaining outstanding balance in the next month. One can get a credit card by simply applying for a credit card in banks or through online aggregators. There could be a reason when an application for your credit card might not be approved.
Some of the reasons behind the rejection of a credit card are:
Bad credit score
A poor credit score is one of the common reasons for the rejection of your credit card application because a credit determines your creditworthiness to the lender and measures your ability and capability of repayments. Poor credit score indicates that an individual is inefficient at repayment. Low CIBIL score reduces your chances of credit card application to be approved.
Low income is directly the reason for the rejection of your credit card application because it shows that you cannot afford a new monthly bill, added to your budget. So, to avoid this, salaried individuals should have a minimum take-home income of Rs 12,000 per month. For self-employed individuals, the minimum net income per month should be Rs 25,000.
Age of the applicant
If the age of the applicant is below 18 years, banks do not prefer to approve your credit card application. Though the minimum age depends on the type of credit card you choose, the minimum age for application of the credit card is 18 years.
Current loan balances are too high
If the current balance of a loan is too high, it might look like you cannot afford a new credit card. To avoid this, first of all, an individual should clear his current running loans or try to reduce his loan amount balance, and then only apply for a new credit card.
Multiple Credit Cards
Banks need full information of an applicant like his financial information, his occupation, his monthly earnings etc. If all these information does not fill up completely then, there are chances of rejection of credit card application. So, to avoid this, carefully fill the application form.
Settlement in previous credit card or loans
If there is a settlement in the previous credit card or in any loans then, bank straightforward denies your credit card application because it shows that the applicant’s credit history is very adverse and he may is not able to pay his future debts.
Above these are the reasons for which bank can reject the application for credit cards. An individual should keep all these points in mind before applying for a credit card to reduce the chances of rejection of an application.
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