Credit Card Rejected: Are You at Fault or Lender?
With rising non-performing assets, lenders have now become very strict. The sole objective of rejecting credit card application is to minimize losses. We all take similar action in our everyday life. For e.g. when your mobile phone bill shoots up, we move to lower plan or switch to some different operator offering cheaper deal. And that’s what lenders do – when loan or credit card payment defaults rise, they target only no risk individuals and straight away reject other risky applicants.
So now the question arises – when card application is rejected in India are you always at the fault or is the bank also responsible?
When you are at the fault:
- Late or delayed payment: This is the most common and obvious reason for credit institutions rejecting your application. For them, you fit into the category of defaulter.
- Incorrect or insufficient information provided: When making application for card, many a times you might enter incorrect or insufficient details such as incorrect income, fake employment status, etc.
- Too many applications in short time period: Too many applications within a short span of time shows credit hungry behavior of an applicant. And banks take this very seriously.
- Too many credit currently ongoing: If you have credit accounts with multiple banks then chances of rejection increases. Because from a creditors eye, it is another sign of credit hungry.
- Income and employment: Every lender has strict income limit below which card cannot be granted. If your income is low then you are less likely to manage debt properly. Your employment also plays a very important role. A person working in listed company is more likely to get card compared to the one working in a small company. In such cases, if income is high even though you are working in a small company then approval chances increases.
When mistake is from bank’s end:
Now let’s understand scenarios when your credit card application is rejected due to mistake at lender’s end.
- Failure or late in updating CIBIL record: Whenever you apply for a credit card, bank first checks your CIBIL report to understand your financial transactions such as current credit, previous late or delayed payments, frequency of applications etc. If they find unpaid dues, then chances of rejection increases. Now this doesn’t mean that – you have not paid bills. It might also happen that – CIBIL records are not updated. You may have fully paid the bills but banks failed to update CIBIL. In such cases, you should immediately approach concerned bank and notify about the mistake and most importantly ask them to submit correct data to CIBIL. As per rule, credit institutions are ought to submit data to cibil within 30-45 days. Such errors are quite common, so before you plan to apply for loan or credit card, check your CIBIL report once. At the same time, you should raise a dispute on CIBIL’s official website – https://www.cibil.com/. Check out tips on improving CIBIL score.
- Do not completely close the account: Post closure of card or loan account, it is your responsibility to get no objection or no due certificate and original documents from the lender. NOC in this case means – you do not owe anything to the bank and all the dues have been fully paid off. NOC will help in case of any dispute in future especially when you apply for a new credit.
- Incorrect details entered: Many times it happens that you make card application on paper. Banks then feed these details manually in their computers record. And then verify all your details to decide on whether to give credit or not. But imagine a situation when your monthly salary entered is Rs. 100000 (1 Lac) but banks enter as Rs. 10000 (ten thousand). Your card rejection chances increases. Check out credit cards for low salaried individuals in India.