A credit card can come in handy when you need to make payments on the go without having to carry cash around. Even though it doesn’t come without its own obligations and downsides, a credit card is one of the most commonly used sources of additional funding.
Getting a credit card is usually easy, but there are times when banks and credit card companies deny credit card applications. In fact, this happens to many people. If you are planning to apply for a credit card, here are reasons why your credit card application may be rejected by your bank or credit card company.
7 Reasons Why your Credit Card Application Will Be Rejected
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1. Mistakes in your application form
Your bank or credit card company will not be able to process your credit card application if you fill some fields incorrectly or forget to fill important fields. This is especially true if the information is very important such as your social security number, tax ID, or phone number. A proven way to avoid this mistake is to double-check all your information before submitting your application form.
2. Low earnings
A credit card is meant for borrowing money to make purchases and subsequently pay it back later alongside incurred interest. So, it’s only normal for the bank or credit card company to check through your earnings to figure out whether you have the financial capacity to pay off what you may potentially owe.
Many banks and credit card companies have a stated minimum income that you need to be earning for you to own the most basic of credit cards. Even if you are earning up to this minimum, you will still have your credit card application rejected if you have other loans and liabilities.
3. Not working for long enough
If you are a fresh graduate or other individual who hasn’t been working for a very long time, your credit card application will be rejected. Most banks and credit card issuing companies require a minimum working period (at least 6 months in most cases) with the same company in order for your credit card to be approved.
So, even if you have been working for a long time, but for many different companies or on contract basis, you will have your application rejected if you haven’t worked for a single employer for the required minimum period.
4. Having too many credit cards
With the wide range of credit card options available today, you could easily get tempted into applying for every card to see, thinking you can’t have too many cards. Yes, there is no fixed maximum for the number of credit cards you can hold at a time, but there are caps if you fall below a certain income level.
If you earn below this level, you can only hold cards from a maximum of 2 or 3 issuers with the credit limit of twice your monthly salary per issuer. But even beyond this, most banks and credit card companies will be unwilling to approve your credit card application if you already own a good number of existing credit cards.
5. Applying for too many cards at one
If you visit those exhibition fairs where swarms of credit card booths await unknowing patrons to convince them into applying for a credit card, you might be tempted to keep applying for card after card as you go from booth to booth. The more cards you apply for, the lower your chances become of having any one of them approved. Even when you have the chance to apply for a hundred credit cards at once, the rule is to pick the one you really want and ignore the rest.
6. No credit history
Though having a bad credit history is worse, not having a credit history at all is another reason why your application will most likely be rejected—even if you meet all other criteria required. Your bank or credit card company would like to see that you have a long history of managing debt, as this tells whether you will be able to pay back your debts on time or you won’t.
7. Not paying your current debts regularly
Before approving or declining your application, the bank or credit card company will conduct a check on all your previous spending and loans history. In other words, they will conduct a credit check. If you currently hold one or more credit cards and haven’t been repaying your bills on time, then your application will be rejected. The rejection will be even more certain if you have piled up debt due to non-payment of interest.