A credit card is an extended banking facility used widely today. A credit card is borrow today and pay back tomorrow. Credit card usage has gone up considerably in recent times. Credit cards are convenient for online shopping. Applying for a credit card is simple and easy. But, there are a few instances where banks may deny credit cards.
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8 Reasons Why You Could be Denied a Credit Card
- Adequate Credit History: Each bank sends credit history periodically to credit information agencies like CIBIL, which will assign credit score based on several aspects like the payment history, number of loans and credit cards availed and type of credit. In the absence of sound credit history, you may not get a credit card. For instance, if your credit score is low, you may be denied a credit card.
- Age Constraint: The people applying for credit cards must be at least 18 years of age. For some banks it is 21 years of age. Let’s say, you are below 18 years and have applied for a credit card that demands 21 years of age. The application gets rejected. An age relaxation is offered to young adults seeking student credit cards.
- Employment Stability: When your job is stable, you have constant income. People with stable income are preferred over the ones with unstable income for credit cards. Some credit card issuers expect minimum work experience of 6 months to a year.
- Inadequate Income: Each bank asks an applicant to meet the desired monthly income levels. Salaried people must have a yearly income of at least Rs 2,00,000 and self-employed must have a yearly income of Rs 1,50,000 to get a credit card from reputed banks.
- Incorrect Details: You must fill the credit card application at banks with complete and accurate personal and financial details. An incomplete or incorrect application, serves no purpose. You must reapply if a bank denies credit card stating that your credit card application is inaccurate or missing important details.
- Debt-to-Income Ratio: Debt-to-income ratio is the ratio of total debt to the total income. The ratio must be as low as possible for a new credit card to be sanctioned. A person with a higher debt-to-income ratio is more likely to default on monthly payments. If you have been denied a credit card for this, create a debt elimination plan to minimize your outstanding credit card balances.
- Multiple EMIs or Cards: If you are servicing multiple loans and credit cards, forget that new credit card. If you are holding multiple credit cards, monitor them closely. Close the unused or inactive credit cards and ensure that your credit score is not affected.
- Unhealthy Banking Relationship: Will you lend your car to someone who does not have a healthy relationship with you even though he or she is a good driver? You don’t. Similarly, credit cards are a privilege offered by banks. The chances of getting a credit card are low for those having an unhealthy relationship with a bank.
See Also: 5 Reasons To Use Credit Cards
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