Money Magazine - Reasons You May Be Denied a Loan or Credit Card!
The advent of credit cards has given rise to a cash free culture all around the world and India is no different. As more and more people are developing an affinity towards using credit cards, it becomes important to understand how credit cards are issued and why is a credit card application declined.
1. Bad credit history: Everything today is collated and quantified, everything sticks, and this applies to your credit history as well. Even if you have defaulted in making payments of your credit card statement 9 years back, there is still a record maintained of it. Individuals who generally do not take repaying loans seriously have a bad credit history and this is the most important reason behind getting a credit card application declined.
2. Low income: Credit cards are unsecured loans and banks do not make enough money through unsecured loans to make them excited towards giving individuals loans who have low monthly income. Generally you need to make at least Rs. 1, 50,000-2, 00,000 annually to make you eligible to use a credit card. If you make below the above mentioned amount, your credit card application in all probabilities be declined.
3. You have multiple credit cards running: If you have a lot of credit cards issued in your name it indicates that you are deep into credit and in all probabilities you do not have a repaying capacity for another unsecured loan. Thus banks will not generally approve your credit card application if you already have a few credit cards issued in your name.
4. You have credit hungry behavior: If you have made several credit card applications in the past month, this shows that your financial condition is unstable and you are looking for credit to make ends meet. Credit card companies will never issue an unsecured loan to a credit hungry individual.
5. Your last default happened recently: You might have a very good credit rating, you might have always repaid your credit card debts on time, but if you have defaulted in making payments in the recent past, the chances of your credit card application getting approved are minimal. Generally what credit card companies look at is if you have defaulted in any payments in last 6 months, so if your default happened 3 years back, it won’t have an impact on your application, but if the default happened in last 3 months, your credit card application might get rejected.
Getting a credit card can indeed make your life simpler, but if you do not keep track of the payments your credit rating might get seriously affected which is a problem to have if you are looking up to a bank to issue you some loan amount. Make your payments in time, and you can be rest assured, your application will never be rejected.
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