Rejection can be hard to take, regardless of where you get it from. One relatable example for many people is when you fail to get approved for a credit card.
You may be getting plenty of offers and proposals in the mail from credit card companies inviting you to sign up for their card. Keep in mind, however, that the pamphlets and calls you receive are not a guarantee that you will easily get approval.
If you have recently experienced rejection by a credit card company, here are four things that you may have done to cause the rejection, and what you can do next time to improve your chances of getting a prompt approval.
1. Not checking the requirements
Before handing in your credit card application, do sufficient research. In countries such as the US, the applicant’s credit score is one criterion that credit card companies look into when determining whether to approve an application or not.
Credit scores are an indication of the person’s ability to pay back their loans. Some credit cards are reserved for people with a minimum credit score. If you have poor credit and you are applying for a card that requires excellent credit, your application is almost guaranteed to be denied.
In other countries or regions such as the UAE, credit card companies may check your monthly salary. Again, this factor indicates the applicant’s capability of paying for purchases made using their credit card.
It can be overwhelming to check each credit card website to see the requirements. A quicker way to do your research is to use credit card comparison sites. In just one page, you can check the features, benefits, fees and requirements of several different credit cards, making it easier to pick one that you have a good chance of getting.
2. Sending too many applications
Your credit score could also be affected by the number of credit card applications you send within a short amount of time. Submitting applications to several companies simultaneously sends a bad signal.
To be on the safe side, limit your applications to just one every six months. The gap should give you time to test out the features and enjoy the benefits of one credit card before you go ahead and applying for additional cards.
By spacing out your applications, you also have time to decide if you want to keep a current credit card and pay any annual fees, or cancel before the year is up.
3. Not having a reliable co-signer
Some credit card companies may require that you have someone co-sign your application. This is especially true for first-time applicants.
A co-signer is typically seen as the person who will be responsible for your debt in the event that you are unable to pay. To improve your chances of getting an approval, look for a co-signer who is in good standing with credit card companies.
4. Applying too far away from home
Banks, credit card companies and similar financial institutions want to know as much about the applicant as they can before making a decision on their applications. Deciding whether to approve your application or not is difficult if they don’t have any idea of your spending lifestyle or ability to pay your debts.
Put yourself in a better position by starting applying for a credit card from a bank or credit union with a branch close to where you live. Better yet, apply for a savings or checking account with this establishment first. Later on, you can apply for a credit card from the same bank or financial institution.
Starting your application close to home increases your chances for an approval for a number of reasons. For one, as an existing account holder, they can check your records and see what your purchasing habits are like, and observe whether you can pay your debts on time or not. Your records put you in better standing than a person who just came through the door to apply for a credit card.
Making transactions at your local bank also allows you to get to know the staff. Much like applying for a loan, your chances of getting an approval improve when the people receiving and going through your application know you, or are at least familiar with you.
These are some of the most common reasons why credit card companies reject applications. With these tips in mind, you can effectively improve your chances of getting your credit card application approved.
AUTHOR BIO
Deepak Kumar is a Co-Founder of SoulWallet, a neutral comparison portal for consumer financial services. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, the company helps customers make the best choices when shopping for financial products such as credit cards and loans.
You must be logged in to post a comment.