7 Things You Didn’t Know about Credit Card Approval
Did you recently apply for a credit card with a lot of hope and fail? You were absolutely sure that with your current salary, you can take on the responsibility of owning a credit card, but ended up with a rejection letter instead?
Then perhaps it’s time to take a closer look at the factors that are critical to ensuring your credit card application is approved. While there are several nuances involved in this that depend on the financial institution you may be dealing with, here is a list of the most common reasons for credit card application rejections.
1. Too many credit card applications
With credit cards, you can buy first and pay later – when you realize this, it is normal to go a little crazy with the number of applications. If you apply for too many cards, chances are that your application will be rejected. Every time you apply for a credit card, banks will send an inquiry to the credit bureau to find out whether or not you are the person who can walk the talk. Each time the inquiry is sent, your credit score takes a hit.
2. Poor credit score
It is of utmost importance that you have a high or decent credit score. A poor credit score means that you are not reliable and eligible to use a credit card. This suggests that you default on payments or miss your due dates or use most of your credit limit. According to Credit Bureau of Singapore, your credit score will tell a bank about your payment record. Hence, you cannot afford to have a bad credit score.
3. Low salary
Most banks in Singapore require you to earn an annual income of $30K to apply for a credit card. If you earn $29,999 annually, the bank will reject your application. You will have to submit an employment certificate or latest payslips as proof. Also, if your current employer has negative reviews, the bank can decline your request as well.
4. High credit card balances
It is advisable to keep your credit card balance under 30% of the available limit. This way, your chances of getting a credit card is higher. Banks and other financial institutions like to see if you are using only a portion of your available limit and not maxing it out.
5. High loan balances
If you have consistently failed to pay your loan amount, credit card companies will be hesitant to issue a card to you. They will think that you will not pay your card debts along with your outstanding loan amount. Hence, concentrate on reducing the loan balance before applying for a credit card. This is always a best practice.
6. On your way to bankruptcy?
If you are on the rocky road to bankruptcy, banks will look at you (mostly your application) as a major problem. After all, you are a threat to their financial security and stability. Imagine this, if someone wants to borrow from you but has not paid his previous debts, will you trust him and give him the money? No, right? Similarly, banks will think that you are incapable of paying your debts.
7. Missed detail on your application form
This is one of the saddest reasons to get rejected. If you forget or somehow miss providing the most vital information like residential address, phone number, date of birth, etc., your request will be denied immediately. In such a case, online applications can be a savior. You will not be able to submit the online form if you do not fill out the necessary fields.
If you look closely, you will realize that most of the above factors are fair and sensible – to you and to the banks. It is not easy to get a credit card. You must give enough evidence or reasons to banks so that they grant you a card. Getting approval can be easy if you keep these factors in check. If you have been rejected once, do not lose hope. Do a thorough research on the requirement and re-apply.
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