With the constant changes in the Indian Financial Market, there are multiple options to purchase products or services. Now it is very easy to apply for a credit card. You can apply for it at your convenience. However, you must be wondering Why Credit Card is Declined in some cases.
For a credit card, the lender has to go undergo a certain process before issuing the card to the customer. Every lender takes multiple factors into account before approving or rejecting a credit card application.
Reasons Why Credit Card is Declined
Most the lenders reject credit card application process if the applicant has a bad credit score. Credit is the major element behind the acceptance or rejection of a credit card as well as a loan. Most lenders have a standard credit score that they consider before issuing the card. In layman’s terms, it is the creditworthiness of the customer i.e. timely repayment of the credit availed by the customer. This is one of the key reasons why credit is declined by banks or issuing authorities.
Usually, a good credit score is considered 750+. The CIBIL Score would be severely affected if:
– You have loans with multiple vendors
– You have applied for a credit card with various lenders
– You have not paid the EMIs on time
– You have defaulted on the timely repayments
If you don’t have a loan history, this has major effects since there would be nothing for the lender to check your creditworthiness.
Let’s explore more reasons suggested by our team of experts.
There are various lenders who are readily available to provide credit card cards to eligible customers, that too offering higher limits. However, it is very important to understand that your repayment capacity and income matter a lot since they will back up your creditworthiness. The income eligibility criteria need to be met and the applicant needs to submit income proof such as salary slips, ITR (Income Tax Returns), and more. Your application might get rejected if you don’t meet the criteria.
It is yet another important factor considered by credit card issuing companies. Some applications might get rejected due to the type of employment. An unstable work history would also affect the approval of your credit badly.
Mistakes in the Application form
Even though might seem like a very small issue, making small mistakes in the application form might result in the rejection of the application form, even if they meet the minimum criteria. The reputation of the employer is another major factor that is considered while evaluating the repayment capacity of the applicant. An unstable work history also affects the approval of your credit negatively.
Owning Multiple Cards
If an individual has multiple cards then his/her name might get rejected if he/she applies for another card. If the income flow is quite high even then the lender would be convinced of the creditworthiness of the buyer. Lenders often don’t prefer borrowers who transfer the balance on their credit cards or change cards frequently.
Almost every lender visits the borrower’s location- both residential and professional. So when they visit make sure you had mentioned the accurate information else they could result in an application form rejection.
The lenders don’t actually specify the reason for rejection and it is advised before you jump and apply for credit make sure you have read their terms and conditions thoroughly.
How do Make Sure the Approval of your Credit Card Application?
If your CIBIL Score is poor then you pay all your dues on time, keep a good balance on your credit card and restrict your applications for new credit cards, about your new application for the credit card.
If you work as a freelancer or earn from any other source as well, make sure you are mentioning it as well as this will increase your chances of getting approval for your application.
- How Credit Card Interest is Calculated?
- How Credit Card Works in India
- How Do Credit Card Companies Make Money
We hope you have the answer to the question of why credit card is declined. And Credit card is not a bad thing if your income and creditworthiness are stable.
Frequently Asked Questions Related Why Credit Card is Declined
How do I fix a declined credit card online?
Before jumping on the payment part, make sure you have double checked all the information. And if even after entering the correct card details the transaction gets declined then you need to contact your bank or card issuer.
How can I get approved for a credit card?
To make sure your credit card application gets approved. Take these major steps
- Don’t apply for way too many cards
- Know what your credit worthiness is
- Apply for cards that fits your credit score
- Pay your bills on time
- Watch your credit utilization
How do I activate my declined card?
It’s quite usual just contact customer care number and follow their instructions.
What is it called when your card is declined?
When you try to make payment online or offline and it gets declined. In such case merchant receives a code and brief explanation such as “Card declined by issuer”. This happens as the credit or debit card issuer has stop a particular transaction.