You might have heard from many financial experts that your credit score is the single most important factor that determines the chances of approval/rejection of your credit card application. However, sometimes it happens that you do have a good credit score and your application for a particular credit card is rejected by the card issuer. This might leave you wondering, what all factors do card issuers consider while making a decision on your credit card application. If you are someone whose credit card application has been rejected despite a good credit score, this article is for you.

good credit score but refused credit card application

Approval or rejection of a credit card application by a card issuer depends not only on your credit score but also on a number of other factors like your income, age and type of employment. Here we are explaining some of the reasons for rejection of your credit card application despite a good credit score-

Not Meeting the Income Requirement

Unsecured credit cards (credit cards not issued against any security amount such as a fixed deposit), almost always have an income-based eligibility criterion attached to them. Some card issuers explicitly specify the minimum income requirement for each of their credit cards- for example, you will find an eligibility section on each of HDFC credit card’s pages, other card issuers- Axis Bank and ICICI Bank, for example, do not specify any income-based eligibility criterion.

Whether a card issuer explicitly specifies or not, internally, there is always a minimum income-based eligibility criterion for every unsecured credit card. It is so because unsecured credit cards are issued purely on a good faith basis which is why, before approving a credit card application, it becomes necessary for the card issuer to be assured that the cardholder has enough financial resources to pay off their monthly credit card bills.

Therefore, if you do not fulfill the minimum income requirement of a particular credit card, even if you have an excellent credit score, your credit card application will certainly be rejected. So, if a card issuer has clearly mentioned the minimum income requirement to be eligible for its credit cards, you should obviously not apply for a credit card you are not eligible for. In case no income-based eligibility criterion is specified by the card issuer, you should keep in mind the eligibility criteria of other similar credit cards in the market by other card issuers.

Under Age/Over Age

Since a credit card is essentially a loan granted by the card issuer to an individual, credit cards are issued only to individuals within a particular age bracket. For example, HDFC Bank issues credit cards only to individuals between 21 and 65 years of age. If you are applying for a credit card and do not fall in the eligible age bracket, your application shall be rejected, regardless of your credit score.

Not a Long Enough Credit History

Another reason for the rejection of your credit card application may be that you are new to credit and do not have a long enough credit history. For example, if you have not availed many loans in the past and are applying for your first credit card, it might be a bit difficult to get your application approved by the card issuer even if you have a good credit score due to punctual repayment of the few loans you availed in the past. In such a case, it is a better idea to first build a decent credit profile with a long enough credit history. A secured credit card issued against a fixed deposit might help you with that.

Type of Occupation

Apart from the amount of income, the stability of the applicant’s source of income- the type of occupation of the applicant- also plays a critical role in determining the eligibility of the applicant for a particular credit card. The more stable the applicant’s employment type, the more is the likelihood of approval of their credit card application. For example, the credit card approval process, in most cases, would be easier for government employees and employees of a reputed private firm.

Too Many Credit Card Applications

If you apply for multiple credit cards very frequently, not only does your CIBIL score take a toll, the chances of approval of your applications also decrease. This is because applying for credit cards (for that matter, even applying for loans) one after another gives an impression to the card issuers that you are credit hungry which certainly puts your financial stability in a bad light.

Mistakes in Application Form or Discrepancies in Documents

Apart from not meeting the eligibility criteria, one of the most common reasons for rejection of credit card applications by a card issuer is discrepancies in the documents submitted by the applicant or mistakes in the card application form. For example, if the spelling of your name on the application form and on the ID proof submitted by you do not match, it is very much likely that your application would be rejected or at least be reverted to you for making the necessary corrections.

Unsuccessful Address Verification

Many card issuers verify the address submitted by the applicant in the application form (and as mentioned on the address proof) by physically visiting the applicant’s premises. It is therefore important to make sure that the address verification process is smoothly completed. In case the physical verification of the applicant’s address by the card issuer is unsuccessful, the credit card application will almost certainly be rejected.

Bottom Line

Since unsecured credit cards are issued on purely a good faith basis, and it is also important for card issuers to make sure that the KYC information (address and identity information) submitted by the applicant is correct; apart from the credit score, card issuers also consider many other factors for deciding the eligibility of the applicant for a given credit card. It is therefore advisable to carefully go through all the terms and conditions of a credit card (including the eligibility criteria) before applying. Another aspect you must be careful about is all the details submitted by you to the card issuer at the time of application are correct and easily verifiable. If you keep all the aforementioned pointers in mind before submitting your credit card application, your application is very less likely to be rejected.

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