Today, a credit card is an essential financial tool for making both online and offline purchases. The penetration of the credit card market is forecast to witness a CAGR of more than 25 per cent between 2020 and 2025. This reflects the increasing propensity of people towards online credit card usage.
It is important to note, however, that card companies do not issue cards to every applicant. Before accepting a card request, companies have to go through an approval process. Let’s take a look at some of the reasons why a credit card application might be denied.
Reasons for Rejection of Credit Card Application
Banks offer various types of credit cards to creditworthy customers. However, if your application is rejected, the following are some of the possible reasons:
Bad credit score
A low credit score is one of the most common reasons for denying an individual’s credit card application. A credit score is critical in obtaining a favourable response from issuers. It reflects the applicant’s financial prudence and credibility. Most companies have a minimum score limit, and if you do not meet the criteria, your application will almost certainly be rejected. Applicants with no credit history also have a difficult time obtaining a card because they are not deemed creditworthy.
The main goal of scrutinizing credit card applications is to ensure that the applicant has the necessary repayment capacity. Individuals with low income or income levels that do not meet the bank’s minimum threshold are unlikely to be issued a card.
Applicants must submit certain documents with their applications, including:
- Income proof (IT returns)
- Salary slip (of past months) or
- Form 16
Even after the submission of all these documents, there is no certainty that applicants with low income will be approved for a credit card.
In addition to the credit score and income, banks also look at your employment status. Applicants who are not stable or who frequently switch jobs are viewed as doubtful. They are said to be untrustworthy because there is no guarantee of future employment or income for such persons.
Aside from work history, the reputation of the organization where the applicant works is also significant in securing the card. If the applicant is employed in a small firm, banks consider such individuals as high-risk with income risk. This is also a basis of card denial.
Incomplete application form
Any error on the application form may result in the credit card being denied. An applicant must understand the proper procedure for obtaining a card and correctly fill out the required details, as well as submitting any required papers. Any incorrect information or missing documents can cause the credit card to be delayed or rejected.
Credit cards in India are issued to applicants following thorough physical verification. It is the final phase in which banks send executives to check your office and residential address.
If you’re still wondering how to get a credit card without being rejected, you must first understand the criteria that banks apply. Before applying, you can also take any necessary corrective actions. With a card at your disposal, you will never be short of money in an emergency. Moreover, when used to make online credit card payments, it is an effective money-saving tool.