Feeling hurt because your latest credit card application just got rejected? Don't take it too personally as hundreds if not thousands of credit card applications get thrown out on a daily basis. Just cause one bank throws out your application for a credit card, doesn't mean that you're not destined to own one.
Perhaps you're just applying for the wrong type of card or might need to make several lifestyle changes to improve your credit rating. With that said, here's 8 reasons why your latest credit card application might have been declined.
1) You Made a Mistake While Filling Up The Application Form
Don't laugh, everyone makes mistakes at some point in time so this scenario is entirely feasible. Suffice to say, the Bank cannot process your application if you forgot to fill in or incorrectly wrote down certain information. This is especially true if the information is vital such as your NRIC number for example. To avoid making this simple and at times laughable blunder, it is always advisable to double check all your information before submitting any form.
2) You Don't Earn Enough
A credit card is essentially a tool from which you can borrow money to make purchases and subsequently pay it back later (with interest of course). With that in mind, everytime you apply for a card the bank has to determine whether you have the financial capacity to pay off what you may potentially owe. It is for that very reason that every card has a designated minimum income amount.
In general, excluding supplementary cards, the minimum income that you need to be earning in order to own the most basic of credit cards is RM24000 per annum. If you earn anything below that, your application is not likely to get approved so you might want to consider just using a debit card for now.
3) You Haven't Borrowed Before
While not quite as bad as bad credit history, applying for a credit with no credit history at all may hinder your application! Even if you meet all the criteria required, lenders like to see that you have a history of managing debt well as this reassures them that you will repay your debt on time. This issue becomes more profound when you choose to apply for a more "advanced" credit card as your first card.
4) You Haven't Been Working Long Enough
This reason generally only applies to individuals who haven't been working for a very long time, namely, fresh graduates. As a general rule of thumb, most banks usually require a minimum working time period (with EPF contribution) of at least 6 months with the same company in order for your credit card application to be approved, assuming all other requirements are met.
This requirement is usually set in place to ensure that the cardholder has some form of stable income as most employees are typically issued confirmation before the 6 month mark of their tenure with their respective company.
5) You Haven't Been Paying Your Existing Current Credit Card Bills Regularly
Whenever you apply for a new credit card, the bank essentially does a sweep of all your previous spending history (credit check). If you presently own or have previously held any credit cards, then the bank will want to look at your history with those cards. For example, if you currently own a credit card and have been repaying all your purchases within the due date in order to keep a low balance, then the bank should have no problem issuing you another card.
Conversely, if you haven't been repaying your bills on time and have started snowballing a large amount of interest or had your card cut due to non-payment, then the bank might be less inclined to issue you a second card. Hence it is extremely important to try to pay down your balances before applying for a credit card if you want to boost your chances of getting an approval. Remember, the more debt you hold, the lower your chances of approval.
6) You've Been Busted for Fraud in The Past
When it comes to Crime, the general rule is “once convicted, never forgotten”. Your criminal record follows you for life and can influence everything from job applications to even credit card applications. The latter is especially true if the crime committed involves monetary fraud. Monetary fraud is formally defined as criminal deception intended to be used for financial gain, examples of which include tax evasion and forgery.
A blemish such as fraud on your record can severely reduce the bank's confidence in you, which may lead them to deny giving you a credit card.
7) You Already Have Too Many Credit Cards
With an array of different credit cards with various benefits available on the market, it's easy to just go crazy applying for every card that you see. After all, you can never have too many cards right? Wrong! Most banks might be less inclined to issue new cards if the applicant already has a significantly large number of existing cards (e.g. 5 or more).
Unless you rake in a massive amount of income annually and keep a spotless credit record, don't expect your fifth or sixth credit card application to get approved.
8) You Applied for Too Many Credit Cards At Once
This is especially true when visiting exhibition fairs where swarms of credit card booths await unknowing patrons to snag them into applying for a credit card. As you go from booth to booth applying for card after card, the likelihood of getting all applications approved slowly dissipates.
As mentioned before, credit card companies usually check everything and anything about you whenever you apply for a new card. Hence, if the bank sees that you're applying for more than one card at the same time, they might be less inclined to grant you an approval.