Credit Card Application: What does too many rejections mean?

But what is the reason behind credit card application rejection?

There are multiple factors behind credit card application rejection; let us have a look:

Low Credit Score

It helps the lender determine your creditworthiness and make sure that you are a reliable customer who will be able to repay the credit card bill timely. An individual’s credit score depends on five main factors: payment history, indebtedness, credit age, credit type, and credit inquiries.

But how would you decide if your credit score is good, and how it affects your credit card application?

Credit score ranges from 300 to 900. An individual with a credit score between 700 to 779 is a low-risk borrower. Anything above 779 is considered good. A credit score below 700 puts the borrower in a risky category, which decreases his/ her creditworthiness, reducing your chances of getting a credit card. Your credit score can be negatively affected if you:

• have too many loans
• are not making payments toward your credit card and loans
• have applied for loans or credit cards with multiple lenders
• have no credit history

Mistakes in Application Form

Sometimes it is difficult to pay close attention to every detail, especially when filling forms. Many of us end up making minor mistakes which become the reason for credit card application rejection. Usually, people miss out on filling in necessary information or fill incorrect details. So, it is better to fill out the application form online to rectify the details before submitting the form.

Low Income

Every lender has different minimum income requirements. If your income is lower than the required income, your credit card application will be rejected. Apart from this, when the lender cannot verify your income with the help of the provided documents (like salary slip, income tax return, and others), your application will be rejected.

Too Many Credit Enquiries or No Credit History

The number of credit inquiries directly affects your credit score and hence your creditworthiness. Similarly, having no credit history means your credit score is either -1 or 0, which means the lender will reject your application. Too many credit inquiries may signify that the borrower is in financial trouble and needs the credit urgently to solve another financial problem, a red flag for the lender.

Employment Status and Location Verification

Lenders avoid giving credit to certain applicants even if they are fulfilling all essential requirements. Some credit card applications are rejected because the borrower is employed at a company that is not listed in the lenders’ list. Another reason for credit card application rejection is irregular employment history. Credit card applications are always verified if the location verification is unsuccessful due to the individual’s unavailability at the given address.

Multiple Credit Cards

Credit card debt is one of the most expensive debts as the interest rate keeps increasing with every late payment or missed payment. Many people take a new credit card to pay the bill of a maxed-out credit card. If your credit report shows the same and you already own multiple credit cards, the lender will not provide you another credit card as you will be a risky borrower and might default on your credit card bills in the future.

Bottom line

In conclusion, these were some of the reasons for credit card application rejection. Credit card approval depends upon many other factors too. Your credit health is the factor that affects it the most. Before you apply for another credit card, make sure that you fulfil all the basic requirements and terms & conditions to avoid the penalty of rejection. Each rejection also costs a reduction in your credit score.

Are you struggling with credit card debt?

Even though every debt is burdensome, credit card debt is one of the most expensive debts, with an interest rate of up to 48%. Getting out of credit card debt is extremely difficult as it keeps increasing month on month. Since the pandemic, people are struggling to pay their credit card bills and fall into the debt trap.

If you are struggling to pay off your debt and your accounts are delinquent, you can reach our trained debt consultant. They can advise you on a possible solution as per your condition and number of accounts. In case you are looking for debt settlement services, you can call us on 0124-6663666 or visit our website to know more.