Today, applying for a credit card has become very convenient, with the option to do so online from the comfort of your home, office, or anywhere. If you are eligible for a pre-approved credit card, getting one is easier. However, whether pre-approved or not, the lender engages in a careful approval process before issuing the card.
Various factors come under consideration during this evaluation, determining the fate of the credit card application. At times, the rejection of a credit card application can be disheartening, and understanding the reasons behind it is crucial. This blog explores the common factors leading to credit card application rejection to enhance your chances of approval.
Top 6 reasons for credit card application rejection
Every lender has their own policies for obtaining a free credit card. Understanding these factors and taking proactive steps to address potential concerns can significantly improve your chances of a successful credit card application.
While lenders may not always disclose specific rejection reasons, a thorough understanding of these common factors empowers applicants to navigate the credit approval process more effectively. Here are the common reasons for application rejection:
1. Low credit score
Having a credit score below 750 poses a significant hurdle for credit card approval. Lenders closely monitor your credit history, and any proof of multiple loans, frequent credit card applications, delayed EMI payments, or previous loan defaults can adversely impact your creditworthiness. A lack of loan history can be perceived as a risk, as there's no track record to evaluate your reliability in repaying borrowed amounts.
Must Read: Benefits & Building Credit Score
2. Low income
While various lenders offer credit cards, your income is pivotal in determining your eligibility. Beyond merely having a source of income, it needs to align with the lender's criteria for repayment capacity. Meeting these income requirements is crucial, and you'll typically need to submit supporting documents like Form 16, salary slips, or income tax returns during the application process. Falling within the specified income requirements increases the likelihood of rejection.
3. Occupation
Your occupation and your employer's reputation are critical factors in a credit card application. Lenders evaluate your repayment capacity based on your job and your employment's perceived stability and reliability. Occupations deemed riskier or unstable work history may lead to application rejection. Additionally, working in sectors that are considered high-risk might raise concerns for lenders.
4. Mistakes in application
Seemingly minor errors in the application form can result in outright rejection. Common mistakes include missing essential information or entering incorrect details. Opting for online credit card applications is advantageous, as these platforms often prompt applicants to fill in mandatory fields, minimising the risk of oversight.
5. Owning multiple cards
Possessing multiple credit cards might indicate a high debt-to-income ratio, making lenders cautious about extending more credit. If your financial profile suggests a pattern of frequently transferring balances between cards or changing cards, it can raise concerns about your financial stability and prompt rejection of your application.
6. Location verification
Lenders physically verify your residential and official addresses. Providing accurate addresses in your credit card application ensures a smooth verification process. Any discrepancies or inaccuracies during location verification could lead to complications, potentially resulting in rejection.
Must Read: What Is A Credit Card & How It Works
6 Tips to ensure application approval
Want to get a credit card quickly after your credit card application declined? Follow these tips to ensure a hassle-free and quick credit card approval:
1. Maintain timely payments
Always ensure punctual repayment of all dues, especially if your CIBIL Score is low. Timely payments reflect positively on your creditworthiness and increase the likelihood of your credit card application being approved.
2. Manage credit card balances
Try to maintain a reasonable balance on your existing credit card. A well-managed credit utilisation ratio, which is the percentage of your available credit you are using, signals responsible financial behaviour.
3. Limit new applications
Restrict the number of new credit card applications. Frequent applications may be viewed negatively by lenders, impacting your creditworthiness. Focus on improving your existing credit profile before seeking additional cards.
4. Provide comprehensive income details
While submitting income eligibility details, include income from all sources. This comprehensive approach presents a clearer picture of your financial stability, potentially boosting your credit card application approval chances.
5. Consider a secured credit card
Opt for a secured credit card by opening a fixed deposit account with your preferred bank. It guarantees repayment, as the credit limit is secured against the fixed deposit. Secured credit cards offer a pathway to gradually improve your credit score by making timely payments.
6. Build credit score gradually
Use a secured credit card responsibly to build a positive credit history. Consistent, timely payments will contribute to enhancing your CIBIL score. As your creditworthiness improves, you may eventually qualify for an unsecured credit card.
Conclusion
Want to secure a credit card without the hassle? Securing a credit card from Kotak Bank, especially the Kotak 811 Dream Different Credit Card, is seamless. Kotak Bank is committed to financial inclusivity and provides credit cards without stringent criteria.
The 811 Credit Card, tailored for diverse needs, offers a straightforward application process, making it accessible to many individuals. Whether you have a limited credit history or want to enhance your financial profile, Kotak Bank's approach aligns with simplicity and convenience.
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