Applying for credit cards is easy. However, getting your application approved is tough. Multiple factors depend on the acceptance or decline of an application. This is primarily because the banks want to be convinced before they lend credit to their customers.
The credit history of the applicant plays an important role while approval of loans. The institutions check their credit history, past debts and details of repayment before accepting or rejecting the application.
The applicant’s application might also be rejected because he does not qualify the minimum age limit. In India, the person needs to be at least 18 years of age and 21 in some cases.
If one has a low income, they are likely to be rejected for the loan or credit card request. Every bank specifies a minimum wage requirement to qualify for the same.
An unstable employment history impacts the person’s application status. Financial institutions prefer lending loans to people who have a consistent job. A person is expected to have a 1-2-year experience at least. Further, they must ensure that they are willing to work for at least six months under the current employer.
If the applicant already has many EMI payments pending or if the person pays over 50% salary to repay EMIs, then the banks generally do not prefer accepting the application. If the person has too many credit cards, he still has chances of getting the application rejected.
The lender verifies the applicant’s information thoroughly. However, if the verification comes out to be negative, the application gets rejected.
The lenders check the applicant’s bank accounts to get an idea about how does he maintain his banking activities. A negative banking history leads to denial. For example, if the lender finds that your salary isn’t credited to your account on time or there’s a check bounced, then there are minute chances that the application gets accepted.
These are thus some of the major reasons why applications for loans or credit cards get rejected. Moreover, if the bank receives a request for a home loan, then the verification becomes stricter. The banks consider legal verification of the property, the value of the property and only then the application is accepted.
Rejection of a request for loan or credit card can bring a negative impact on your credit score. In such a case, one is likely not to get any loan in future too. To prevent such critical situations, it is always recommended to get correct documents and check the eligibility criteria before applying.