Checklist for Credit Card Application
Has your credit card application been rejected lately? How did you feel about it? Do you know why the application is rejected? Whatever the reason may be, the conclusion is that your credit card application is declined. Naturally, no one likes rejection. If you ask for something, you will be delighted if your request is granted. But if it turns the other way round, its takes understanding and the power to control one’s emotion in order to accept the rejection. When it comes to the rejection of credit card application, other things may be attached. It is not just about the issue of emotional pain that you are rejected. Every time you apply for a credit card, a research is conducted on your credit and this can take toll on your credit score. The matter becomes worse when such application is rejected. If you are the type that doesn’t like rejection or you don’t want any negative effect that such rejection may have on your credit score, you may like to know why your credit card application may be rejected before you attempt applying. Without mincing words, below are some of the reasons credit card application can be rejected.
Reasons for Credit Card Application Being Rejected
You are under-age
If you have not attained the age of twenty one years old, you will be considered too young to be issued credit card. Twenty one years of age is the benchmark for anyone applying for a credit card. However, if you a student and has attained the age of eighteen with a proof of sufficient income, your credit card application can be approved. Nevertheless, you should understand that student credit cards may not carry the same benefits with the regular credit cards.
Insufficient Credit History
If you don’t have any credit history, it is difficult for the card companies to assess your credit worthiness. You may say that you are credit worthy. Nobody is saying you are not but the problem is that your claim is not verifiable. The only way the credit company can authenticate your claim is for them to be able to go through your credit report. The question you may ask is, how can a first timer secure a credit card? At least, everyone has to start from somewhere else. The truth is that, without you starting, how then can you have a credit history? The short cut to this is to have someone co-sign your credit card application. This person should be a close relation such as your parent. It is expected that the co-signor should have good credit history with good credit score. If the credit score of the person is bad, your credit card application will still be declined. The implication of having a co-signor is that, if you default in your obligations, the person will be financially responsible for your card balance.
Read Also: Student Credit Card and Its Importance
History of default in payments
If you don’t have credit history, you don’t need to bemoan the situation. This could be understandable. A person filing his credit card application for the first time may not be expected to have credit history in actual sense. Not having credit history is not as bad as having poor repayment history. In principle, a person with no credit may say that he is credit worthy. But a person with history of various defaults of payment may not be able to prove his innocence. So, if you have poor repayment history, you should not expect your next credit card application to be approved. If you will ever get it approved, it will be with stringent terms. My advice for people with history of poor repayment is to try to correct their mistakes by ensuring that they pay their balance promptly without any further default. By the time you do this repeatedly over a period of time, you will be able to regain the confidence of the credit card companies.
No proof of income
If you are out of job or you don’t earn sufficient income, your credit card application may be rejected. You don’t need to get emotional about this. The truth is that, if you don’t have a stable source of income, you might find it difficult to pay your card balance. Personally, you may not have the mind to default in payment but if the means to pay is not there, you will default at the end of the day.
Maxed out credit
A lot of people make the mistake of maxing out their credit limit. That you are given a credit line does not mean you should exhaust the credit line. Even though you pay off the balance at the end of the month, it still doesn’t help your credit. Your credit card application may still be rejected except you can prove that you now have additional flow of steady income. Maxing out your card might serve as a red flag that you are under some financial pressure. Thirty per cent credit utilization is considered healthy.
Bad Credit Score
Your credit score has a lot to do as to whether your credit card application will be approved or disapproved. If you have a bad credit score, your option may be to apply for credit cards that are specifically designed for people with bad credit score. The APR of such credit cards are usually quite high. Another option is to apply for secured credit card.
Read Also:Bad Credit and How to avoid or Fix it
No Stable Job
Credit card companies are more disposed to granting credit cards to people with stable job than people who work as freelancers. I am not saying that your credit card application will not be approved if you work as a freelancer. There are freelancers that have clients where they receive steady income. Such people will not have problem having their application approved, all things being equal. But there is a category of freelancers who may secure job this month and may not know the next time or how soon they will secure their next job. This category of freelancers may find it difficult getting their credit card application approved.
High Debt Profile
When you apply for credit card, you are simply applying for a line of credit. This means that the card issuer allows you to use their fund to make purchase with the hope that you will repay. If you are already having huge debts either as personal loan or high credit card balance, your application for credit card may be rejected. However, if the ratio of your debt to your income is quite low, your application may still be considered.