There could be varying reasons for your credit card rejection. One of them is frequent credit card applications within a short period. Other reasons could be prior defaults on loans or repayment delays.
Let us understand the 5 reasons for a card rejection.
- Insufficient credit score: A low credit score is one of the primary reasons for credit card rejection. Lenders assess your creditworthiness based on your credit history, and a low score may indicate a higher risk of defaulting on payments.
- Unstable income: Lenders prefer applicants with a stable and sufficient income to ensure timely repayments. If your income is not up to the lender's requirements, your application may be declined.
- High debt-to-income ratio: A high debt-to-income ratio, where your debt obligations are significant compared to your income, may raise concerns for lenders and lead to rejection.
- Multiple credit applications: Frequent credit card applications within a short period can make you appear credit-hungry, raising concerns about your financial stability.
- Prior defaults on loans: Previous loan defaults or missed payments on credit accounts may negatively impact your creditworthiness and result in a credit card rejection.
Follow 5 steps for a credit card re-application
- Check your credit report: Get a copy of your credit report and review it for any errors or discrepancies. Dispute and rectify any inaccuracies that could be affecting your credit score.
- Improve your credit score: If your credit score is the reason for rejection, focus on improving it. Make timely payments on existing loans and credit cards, keep credit card balances low, and avoid applying for new credit unnecessarily.
- Understand the lender's criteria: Different lenders have varying approval criteria. Research and apply to lenders whose requirements align with your financial profile to improve your chances of approval.
- Address debt-to-income ratio: Reduce your debt burden by paying off existing debts. A lower debt-to-income ratio can enhance your creditworthiness and increase the likelihood of approval.
- Wait for a suitable period: Avoid reapplying immediately after a rejection. Give yourself some time to improve your credit profile and financial situation before applying again.