6 Reasons Why Your Credit Card Application Declined & how to improve

Updated on: 6 Dec 2024

If your credit card application is declined, it isn’t the end of the world. Nowadays, applying for a credit card is easier, thanks to fintech advancements that allow you to get quick approval from the comfort of your home. Despite the easy access, issuers have specific eligibility criteria that you must fulfil.

All financial institutions issuing credit cards can reject your application for eligibility-related reasons. Knowing them well in advance can help avoid unnecessary rejections on your application.

Read on to know some common reasons why issuers may deny your credit card application, what to do when your credit card application is declined and more.

Reasons why your application may get rejected

Here are some of the most common reasons why issuers may reject your application.

Poor Credit Score

Your credit score is a three-digit numerical summary of your creditworthiness. Lenders consider this a vital criterion before approving any form of credit. The score ranges between 300 and 900, with a score above 750 being optimal.

While some financial institutions may approve if you have a score of 700 or above, a value less than 650 may result in the rejection of credit card or loan approval. So, check and improve your credit score before applying for a credit card or loan to avoid rejection.

No Credit History

Card issuers review your credit history to assess your ability to handle credit and your repayment strategies. This allows them to evaluate the risk of providing the credit card. Thus, being new to credit can pose a hurdle in getting a credit card.

In such cases, some issuers allow you to apply for a secured credit card. This is a type of credit card for which you need to pledge collateral, such as a fixed deposit. Using this card, you can build a credible history before applying for a regular credit card.

Insufficient Income

Credit card providers check your income proof to ensure that you have sufficient repayment capacity. Hence, issuers insist you provide a salary slip, income tax return or Form 16 document when applying for a credit card. If you meet the required income eligibility parameter, you have a higher chance of getting the credit card on favourable terms.

However, in certain situations, despite having a decent income, your application may still get rejected due to the debt-to-income (DTI) ratio. A high debt-to-income ratio indicates that most of your salary goes into paying bills and dues, so you cannot afford another EMI. Thus, it’s essential that you maintain a DTI ratio of less than 30%.

Unstable Employment

Most credit card issuers prefer applicants with stable job profiles and employment history. If you frequently change your jobs every 6 months, you may find it difficult to get approval for a credit card.

Error in Application Details

Any minor error in your application can lead to rejection, so you must fill out your application accurately. Re-check your application before submitting it and provide complete information. If you have any doubts, you must contact the issuer immediately.

Multiple Applications

When applying for a credit card, ensure you don’t apply simultaneously with different issuers. Each time you apply, the issuer runs an inquiry into your credit history that can cause a dip in your credit score. Hence, to avoid your credit card application being declined, apply with one issuer at a time.

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What to do after your Credit Card application is declined?

Now that you have a solution to the query, ‘Why my credit card application declined,’ here are a few tips to improve your chances of approval.

Ask the issuer the reason for your credit card application getting declined
Review your credit report and score regularly
Pay your credit card bills on time and reduce your debt-to-income ratio
Re-check your application to spot errors and rectify them at the earliest

In conclusion, you must work on your creditworthiness before applying for a credit card. All credit card issuers set varying terms and conditions you need to match before getting approval. Hence, visiting their website and reading these terms carefully before applying is better.

If you plan to get a new credit card, consider the Fibe Axis Bank Credit Card. As India’s first numberless credit card, it allows you maximum security against identity theft and fraud. With zero annual and joining fees, this UPI-enabled credit card offers up to 3% cashback on all your transactions, along with other perks such as complimentary lounge access and much more. Download the Fibe App or apply on our website to get started!

FAQs on Credit Card Application Rejection

What happens if I get rejected for a credit card?

If your credit card application is declined, it does not affect your credit score. So, you can reapply once you understand the exact reason for rejection.

Can we apply for a credit card after rejection?

Yes, you can re-apply with the same or different issuer, but it’s best to wait before applying for a card immediately after rejection.

What is the percentage of credit card rejection?

Since your chances of approval or rejection depend on your eligibility and issuer’s terms, there is no fixed percentage for credit card rejections. Also, these criteria may vary from one issuer to another.

Hence, maintaining a spotless credit history and an optimal score is one of the various strategies you can adopt to avoid credit card rejections.