13 Steps to Make Sure Your Credit Card Application is Not Rejected

Posted in Cards Article By Bajaj Markets - Feb 21,2023 Views Icon1.07 K Views
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The rejection of a credit card application is a common occurrence and nothing to be alarmed about. There might be numerous reasons as to why your credit card application was rejected. The reasons can include insufficient income, limited credit history, multiple credit card applications, frequent switching of jobs, low credit score, errors in the application form, late credit card payments, and so on. Understanding these factors will help you avoid repeating such instances in the future while you reapply for a credit card. 

Once you manage to figure out where you might have gone wrong and pinpoint the factors that might have contributed to the rejection of your credit card application, you can take measures to ensure that your application is reconsidered. 

Here’s what you can do post identifying the factors that led to the rejection of your credit card application: 

Check Your Adverse Action Letter

When your credit card application is rejected, you will receive an Adverse Action Letter stating why the application was denied. For example, if there’s an issue with your credit score, you can request the credit card company for a copy of your credit report. You can go through the contents of the credit report and check for any inconsistencies. If you find any, take measures to improve your credit score and reapply. 

Contact Your Credit Card Issuer

If you find the reason stated in your Adverse Action Letter unsatisfactory, you can contact the credit card company and enquire about the same. Generally, the rejection could be due to minute errors such as typos in your name, address or income. These errors could be easily rectified over a call and you could reapply for a credit card. 

Review Your Credit Report

A credit report gives you elaborate information on your credit profile inclusive of details of all the accounts you hold, your payment history and other financial information. By reviewing the report, you will be able to get an idea of the payments that you’ve missed. Such details will help you centre your focus on what issues to resolve first. 

Make Sure You Meet the Eligibility Criteria for the Credit Card

Each credit card has a pre-decided eligibility criteria that you must satisfy if you intend on applying for it. If you fail to meet these criteria, your credit card application is likely to be rejected. Some of the factors that a credit card company would consider are income, credit score, age, and so on. Hence pay close attention to the eligibility criteria and make sure you fall within the respective criteria. 

Pay Your Credit Card Dues on Time

Making regular payments every month will help you build a stable credit history and boost your credit score. This includes mortgages, utilities, student loans, rent, and credit cards. It is advisable to set up automatic payments so that at least the minimum payment that is due every month is taken care of. This will help you avoid late payment penalties due to missing out on any payments accidentally. 

Avoid Applying for Too Many Credit Cards

Applying for too many credit cards gives the image that you’re unable to manage your finances efficiently and constantly rely on credit cards to tackle your debts. This will make you seem desperate and could be off-putting for the credit card provider. However, if you intend on owning multiple credit cards, it is wiser to maintain a six-month buffer between each credit card application.

Work on Improving Your Credit Score

Once you get a good look at your credit report you will be able to gauge the parameters that require improvement. Although, improving your credit score might not seem like an easy task, it isn’t a pipe dream either. If you clear your credit card dues on time, keep the rate of utilisation low, and pay out any existing debts, you should be good to go. 

Get a Co-signer

If you do not have a credit history or have a bad credit, you could get a co-signer. A co-signer is someone that will be held responsible to pay your credit card debt if you are unable to pay it yourself. Alternatively, you can also request a trusted credit card holder, to add you as an authorised user. This will allow you to use the credit card as your own, but the responsibility to clear the dues would lie in the hands of the primary cardholder. 

Opt for a Secured Credit Card

If your credit card application is rejected owing to your income or your employment, you could apply for a secured credit card. These credit cards are generally provided against your  fixed deposit. Since the credit limit on these cards is against the amount of the fixed deposit, the credit card issuer will be able to approve the credit card without any hesitation. 

Keep an Eye on Credit Utilisation

Credit utilisation rate is the amount of credit that you are using in comparison to the total credit that you have at your disposal. It is imperative that you keep your credit utilisation rate below 30% in order to hold up a good credit score. 

Diversify Your Credit

Most credit card issuers will check your creditworthiness by taking a look at your credit history. If you have a good mix of instalment credit such as mortgages and loans, and revolving credit such as credit cards, the chances of your credit card application being approved will be higher. Such a diverse credit range will give the notion that you are capable of managing your finances with efficiency.

Apply for a Basic Credit Card

If your credit score doesn’t match the eligibility criteria of the credit card you wish to apply for, you can get a basic credit card in the meantime. A basic credit card’s eligibility criteria can be met without much difficulty. You could use this card for some time and work on improving your credit score by making timely payments, thus allowing you to upgrade to the card of your choice in the future. 

Choose a Trusted Credit Provider

The chances of having your credit card application approved are relatively higher if you opt for a bank or financial institution where you already hold a savings account. 

Having understood the measures that you can adopt to increase the chances of the approval of your credit card application, the question of  ‘How long should you wait before you reapply?’ arises. There are two instances that you could consider. If your application was rejected because there were minor errors and they have been corrected, you could apply instantly. But if the rejection was due to your creditworthiness, it is recommended that you wait for about six months before you reapply. 

On most occasions, the rejection of your credit card application is rather temporary than permanent. Hence, a conscious effort on your part with regard to your credit card application can work in your favour when you reapply for it in the future.

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