You recently went out to get a credit card and you can’t figure out Why Your Credit Card Application Is Rejected: Here are 13 Common Reasons
You’ll typically discover whether you’re approved for a credit card upon approval. Denial, on the other hand, is a whole different story. The vast majority of credit card issuers fail to notify consumers in advance that their credit card application was denied.
Instead, they will send you an adverse action letter that will give you details about the outcome of your application within 7-10 business days of your application.
To help you find out the specific reasons your credit card application was denied, you’ll receive an adverse action letter. A copy of your credit report will be included in the letter, along with instructions on how to request a free copy of your credit report if one was used in the decision.
As you wait for your credit card application to be approved, here are some reasons it might be denied. You may be able to guess why you were rejected because of the following:
Why Your Credit Card Application Is Rejected
1. You have an excessive number of credit cards.
Your credit card application may be denied based on the number of credit cards you already have. There isn’t a single number that can be used for all credit card applications. Instead, it varies depending on the credit card company.
2. You haven’t spent enough time at your current job.
Your credit card application may be denied if you have a shaky work history. Credit card companies prefer applicants who have a track record of repaying their debts. You may have a difficult time getting approved for a credit card if you’ve been job-hopping and have gone long periods of time without a paycheck.
3. Typographical errors in the application form
Regardless of this seeming triviality, it is possible for credit card applications to be rejected because of typos in the application form. The great majority of applicants make this error while filling out the application form, for example, forgetting to provide the necessary information, entering incorrect data, and so on.
This is why you should apply for a credit card online rather than filling out paper applications, as online applications ask for any missing fields to be filled out.
4. The amount of money you owe on your loans is excessive, the most common reason Why Your Credit Card Application Is Rejected .
You may find it difficult to take on a new payment if you have too much existing debt. Credit card issuers may be hesitant to give you a credit card if your loan balances are high. Paying down your loan balances can help you get approved for a loan.
5. Your credit card debt is out of control.
Credit card companies want to see that you’re only using a small portion of your credit limit. You can expect your credit card application to be denied if you use too much of your available credit, especially if it’s maxed out. It’s best for your credit score and your ability to get approved for a new credit card if you keep your balances below 30%.
6. Your credit report contains an excessive number of inquiries.
Applying for too many credit cards and loans in a short period of time can result in your credit card application being denied, even if the other credit cards are approved. You will not be denied approval if you have a certain number of inquiries. When applying for a new credit card, it’s best to keep your credit inquiries to a minimum.
7. Your credit report shows a charge-off.
A credit card balance that has been unpaid for six months or more is considered a charge-off. It’s one of the most damaging items on your credit report. If you have recently failed to pay another credit card, a new credit card company will be hesitant to give you a credit card.
8. You have a limited credit history or a thin credit file.
If you’ve never had credit before or don’t have much credit experience, your credit card application may be denied.
For FICO to generate a credit score for you, your credit report must contain at least one account that has been active in the last six months.
Because it can’t assess your creditworthiness without a credit score, the credit card company is more likely to deny your application.
If you’re new to credit, consider getting a secured credit card or a student credit card to start building your credit history.
9. You are not of legal age to obtain a credit card.
Because you are under the legal age to obtain a credit card, your application is likely to be denied if you are under the age of 18. There are a few exceptions to this rule. If you have your own income and have already been added as an authorized user to your parents’ credit card, you might be able to get approved for a credit card.
10. Your earnings are insufficient.
The amount of income required for a credit card varies depending on the credit card company. If you don’t make enough money for that particular credit card or if you don’t have a source of income, your credit card application may be denied.
Because credit card issuers don’t publish minimum income requirements for their cards, it’s up to you to figure out which ones are right for you.
Even a history of inconsistent income could be Why Your Credit Card Application Is Rejected.
11. Verification of location
Fully two-thirds of lenders conduct physical verification of the applicant and his or her address. If nothing goes wrong when the company’s representatives verify their home and office addresses, then it is important that they make the visit in person.
Accuracy is critical when applying for a credit card, so make sure the address you put in is correct.
12. You’ve recently acquired a collection or a public record.
Collections and public records have less of an impact on your credit as time goes on. These, however, are the most damaging to your credit when they first appear on your credit report. These serious delinquencies indicate to the credit card company that you don’t have enough money to pay your bills and could be Why Your Credit Card Application Is Rejected.
13. Your Last Delinquency Was Too Recent
More than just the type of delinquency on your credit report is taken into account by credit card issuers. They also take into account how long it has been since you were delinquent.
Recent payment history is more predictive of how you’ll handle a new credit obligation than payment history from years ago. A 90-day late payment from six months ago, for example, will hurt your chances of getting approved more than a six-year-old negative entry.
The above reasons are most of the common reasons Why Your Credit Card Application Is Rejected.
Why Your Credit Card Application Is Rejected: FAQs
- How can I get a credit card if I don’t have a credit history?
You can overcome your lack of credit history by taking out a low-interest, unsecured personal loan. You’ll be well on your way to building your credit card history and improving your CIBIL score once you start paying your Equated Monthly Instalments (EMIs) on time.
- What should I do if my credit card application was turned down due to a lack of consistency in my income?
You can apply for a secured credit card if your application has been rejected due to insecure employment or low income. You will receive this card in exchange for a deposit. As a result, the risk of defaulting on a loan payment will be reduced.
- If I ask for one, will the bank give it to me?
When your application is declined, you should immediately request a free copy of your credit report. Before you reapply for a credit card, look over the report to see how you can improve your credit score.
- If I have multiple loans with different lenders, will my application be rejected?
If you have multiple loans with different lenders, that is fine. Your application will be rejected, however, if you have not paid off these loans.
- How can I get my credit card application approved despite previous loan defaults?
Your credit score and credit history may suffer if you default or are late on your loan EMIs. This will also have an impact on any future loan or credit card applications you submit. Paying your EMIs on time is the only way to avoid this. If the amount is too large to repay, you may be able to persuade the bank to extend your repayment period so that your EMI is reduced to a level that you can afford.
- What should I do if my credit card application was turned down due to my excessive credit card usage?
If you have a lot of credit cards, you might not be able to get a good deal when applying for a new one. If you require additional credit, it is preferable to request that the credit limit on one of your existing credit cards be increased.
- What options do I have if my credit card application is turned down due to a shaky work history?
Working for an employer for at least a year or more is the best thing to do in these situations, as you will have a better chance of getting your application approved.
- What is the difference between an adverse action letter and a warning letter?
The bank will send you a “Adverse Action Letter” explaining why your application was turned down. Make sure you read this letter thoroughly so you’ll know what to do if your application is rejected in the future.
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