Relation between Credit Card Approval & Your Salary, Job Type, Stability

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Application for credit card can now be made online at a click of a mouse. But what happens next is very crucial because amongst the various factors which banks consider before approving any card application of a working professionals are the employment details along with credit history check and others.

Salaried individual’s looking for buying credit card has to keep their fingers crossed after making the application. Because lenders scrutinize each application in detail in order to reduce their losses as non-performing assets affects their profit. So let’s take a look at how your job and credit card approval is related:

  • Salary: The most important eligibility criteria is the annual income of the applicant. Higher the income, higher the chances of getting credit card with high limit. However if your salary is low, then chances of rejection increases because according to the bank, low income means that your repayment capacity is poor and you may not be able to make monthly payments on time. Although many banks offer credit cards to low income professionals but there are many other factors related to your job as described below.
  • Type of Job: After salary, another criteria considered by the bank is the type of employment. There are common job types such as part-time, full-time, consultant etc. However banks always prefer applicants who are into full time job. Because there is no guarantee when it comes to part-timer due to the nature of their job and whether they would continue earning the same income after their job ends increasing the chances of payment default.
  • Company: The organization you work for matters a lot too. Salaried individuals working in listed companies or big companies are always preferred over the ones working in small or mid sized firm. One common problem faced by employees working in small companies in India is that they are not issued salary slip. Morever salary credit is not on a fixed date and often gets delayed (sometimes in months), so it creates problem when banks demand salary slip. This is one of the reason why credit card application of individual’s working in small firms often get rejected as lenders do not feel safe in issuing the card to such employees. Although as per law, issuing salary slips is mandatory but still firms do not provide this to their employees creating problems when they apply for credit card or any type of loan such as personal, home etc.
  • Job stability: Individual’s who have recently started working but was previously unemployed or has been changing the jobs frequently are denied credit card. Because too many job switches means inconsistent income. So such individual’s should wait for minimum 6 months and then apply for credit card.

Documents required by the banks related to the employment:

Most of the banks two documents related to the employment as follows:

  • Salary slip or certificate: If you are working in a multi-national company then depending on the bank you will need to submit last 3 or 6 months salary slip.
  • Last 3 or 6 months bank statement showing salary credits and income tax returns: Employees working in small companies are asked by banks to furnish bank statement as well showing salary credited and income tax returns. This is an additional check done by the banks to verify the authenticity of the salary slip.

Apart from the above mentioned job related documents, you will be also asked to provide other common mandatory documents such as address and ID proof.

Best alternative for getting a credit card when it gets rejected because of low income or other factors is to open a fixed deposit account and get credit card against it. Banks will never ask you for a salary slip or bank statement or the company you work for. However remember that cancellation of fixed deposit account is not possible unless credit card is surrendered. And make a habit of paying the due amount on time without a single miss, as it affects your credit score.

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