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Credit card woes: Case of a rejected application

5 MinsMay 28, 2021

Nisha Doshi, aged 25, recently applied for her first credit card but her application status read 'pending' for several days before it was rejected. She applied for a credit card three more times with different hanks in the following 30 days, but her request was denied every time. Let us understand why Nisha’s credit card application was rejected and what she can do to avoid such a situation in future.

credit card application

Why was it rejected four times?

The first time credit card application was rejected, was because she didn't have a credit score. Subsequently, it was rejected because Nisha made multiple applications in a short period. This meant that there were several inquiries on her credit report, which led to rejection.

Lesson learnt: Limit yourself to minimal applications while applying for your first credit card.

Other reasons why your credit card application could get rejected include:

  • Loan balances are too high: You may already have multiple loans like Personal Loan, auto loan, etc. If that is the case, it may raise doubts about your ability to service your credit card dues and make the bank cautious about approving your application.
  • Credit card balances are too high: Multiple credit cards with high utilization ratios can also be a reason for additional credit cards getting rejected. Ideally, your credit card utilization ratio should not exceed 30%. This means, restrict your spending on the credit card to 30% of the total credit limit. This is also one of the factors that help in maintaining a high credit score.
  • Not enough Income: Credit card companies need a basic income level before they issue a card. You will be rejected if you don’t meet those criteria.
  • Too many credit cards: If you have too many credit cards, the bank may flag you as a ‘high risk’ customer and not approve your application.
  • Multiple late payments: If you regularly pay your credit card bills after the due date, it affects your credit score, making it challenging to get another card.
  • Credit card settlement: If you have ever settled your credit card (negotiated with your credit card company to pay less than what you owe), it's next to impossible to get a new card.
  • Age, employment and income: Most banks require their customers to be over 23 years of age, have a stable employment record and regular income. If you don't meet these conditions, it's challenging to get a card.
Personal Loan

[Also Read: Checklist To Look At When You Choose Your Credit Card]

Getting back to Nisha, what can she do to apply for a credit card successfully?

  • Wait before applying again
    • She needs to wait for at least a year before applying for a credit card.
  • Check credit report and dispute any inaccuracies 
    • Nisha can request a free credit report, check if any factors contributed to the denial and get those mistakes rectified.
    • Once rectified, she can then ask the issuer to review her application again.
  • Get a co-signer
    • Nisha could get a co-applicant with a good credit score to share the risk with her and make her application look more favourable. Usually, only close friends and family are willing to do this.

Axis Bank offers a range of credit cards that come with various benefits tailored to its customers' preferences. Customers are also entitled to Edge Reward points depending on their spending patterns. You can redeem them for a range of attractive deals and offers.

To know more about Axis Bank Credit Cards, visit us online.

Disclaimer: The Source, a Mumbai-based content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.