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Five surprising reasons why credit card application could be denied
There are numerous potential reasons why a credit card application can be rejected, and the applicant is left confused. Knowing the reasons in advance can enhance your prospects of approval the next time.
There are numerous potential reasons why a credit card application can be rejected, and the applicant is left confused. Knowing the reasons in advance can enhance your approval prospects the next time. It can also provide insights into things one should remember while applying for a credit card.
Five unexpected reasons why credit card application could be rejected
- Incorrect information on your application: Errors in your application form, like incorrect spellings, name details, PAN, Aadhaar details etc., will lead to straight rejection. These could be typos in your personal details, wrong pay scales, or missing documents. Check your application carefully before submitting.
- Low credit score: Poor credit score is also one of the most common reasons for denial. Most credit card issuers prefer individuals with a score of over 750. If your score is below this, it could be a sign to lenders that you are a higher-risk customer and, hence, rejected. Monitoring and maximizing your credit score and improving your credit profile will likely enhance the possibilities of approval.
- Low or insignificant income: Credit card issuers also often have income requirements that the candidates are supposed to meet. Your income reported needs to satisfy several requirements in order to be approved. One must report the appropriate income documents correctly and align them with the requirements of the card.
- Too many recent applications: Applying for several credit cards within a very short time frame can be bad for your credit score. Each application will result in a hard inquiry on your credit report, and lenders will view this negatively. It's better to space out applications and become more creditworthy before reapplying. Just like in life, integrity is everything here.
- High debt-to-income ratio: If you are currently burdened with significant debt to your income, lenders will not want to advance more credit. Generally, the debt-to-income ratio should be near 0. This means that the lesser the amount of debt in comparison with your income the better it is. A strong debt-to-income ratio is reassuring because it will allow less concern regarding further applications being authorized. Keeping costs low and bringing the ratio lower should be the focus for later.
Knowing these, you can take proactive steps to fix your credit history and be in a better position to have your next credit card approved.
(Note: Using a credit card carries its own set of risks)
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First Published:18 Feb 2025, 07:34 PM IST
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