| Overview: Understanding why credit card applications get rejected and taking the right steps afterward can help you build creditworthiness and secure approval on your next attempt. This guide covers common denial reasons and practical recovery actions. |
Why Credit Card Applications Get Denied in India
A number of credit card applications get rejected every year, primarily because of low credit scores. Getting denied doesn’t mean you’re permanently blocked from credit access; it’s often a temporary setback that can be addressed with the right approach.
Credit card application denial reasons vary, but understanding them helps you take targeted action. The steps after credit card denial are crucial for improving your chances of future approval and building a stronger financial profile.
Common Reasons for Denied Credit Card Applications
Getting rejected for a credit card may seem like a personal defeat, but knowing the probable reason can help you improve your chances of getting a credit card in the future.
Low Credit Score
A credit score below 750 significantly reduces approval chances. Indian banks typically prefer scores above 750 for premium cards and above 650 for basic cards. Your score reflects your credit history, payment behaviour, and debt management skills.
High Debt-to-Income Ratio
If your existing EMIs exceed 40% of your monthly income, lenders view you as high-risk. This includes personal loans, home loans, and other credit commitments that strain your repayment capacity.
Insufficient Income Documentation
Incomplete salary slips, missing ITR filings, or inconsistent income proof can lead to rejection. Banks need clear evidence of your earning capacity to assess loan repayment ability.
Negative Credit History
Late payments, defaults, or settlements on previous loans create red flags. Even a single missed payment can impact your creditworthiness for months.
Steps After Credit Card Denial
Take the guesswork out of the equation and take the next steps proactively if your credit card application is denied.
Request Specific Rejection Reasons
Contact the bank within 30 days to understand the exact reason why your credit card application was denied. Banks are required to provide detailed explanations under RBI guidelines, helping you identify areas for improvement.
Check Your Credit Report
Get your free credit report from CIBIL, Experian, or Equifax. Look for errors, duplicate entries, or fraudulent accounts that might be affecting your score. Dispute any inaccuracies immediately through the respective bureau’s online portal.
Pay Down Existing Debt
Reduce your credit utilisation ratio below 30% across all cards and loans. Focus on high-interest debt first, as this improves both your score and debt-to-income ratio.
Build Credit History
If you have limited credit history, consider a secured credit card or becoming an authorised user on a family member’s account. Regular, on-time payments help establish a positive credit pattern.
| Did you know: A single missed payment can drop your credit score by 50-100 points and stay on your report for 3 years, making it one of the most damaging credit mistakes in India. |
When to Reapply for a Credit Card
Wait at least 3-6 months before reapplying, giving yourself time to address the underlying issues. Multiple applications within a short period can further damage your credit score through hard inquiries.
Use this waiting period to:
- Improve your credit score by 50+ points
- Reduce existing debt by at least 20%
- Gather complete income documentation
- Research cards that match your current profile
Consider checking your credit score regularly during this period to track your progress and ensure you’re moving in the right direction.
Alternative Credit Options
While working on credit card approval, explore other credit-building options. Secured credit cards, small personal loans, or co-signed accounts can help establish positive payment history without the strict requirements of unsecured cards.
In a Nutshell
Reasons for denied credit card applications are often addressable with time and effort. The key steps after credit card denial include understanding specific rejection reasons, improving your credit profile, and timing your reapplication strategically. Focus on building a strong credit history through consistent payments and responsible debt management. Check your credit score on the Airtel Finance website regularly to monitor progress, and check out the Airtel Finance Axis Bank Credit Card as your next option when you’re ready for your application.
FAQs
1. Does a rejected credit card application hurt my credit score?
The hard inquiry may temporarily lower your score by 5-10 points, but the rejection itself doesn’t cause additional damage.
2. Can I apply to multiple banks after one rejection?
Avoid multiple applications within 30 days, as this creates additional hard inquiries and signals desperation to lenders.
3. What’s the minimum credit score needed for approval?
Most banks prefer scores above 750, though some offer cards for scores between 650-750 with higher interest rates.
4. How long do rejection reasons stay on my credit report?
The inquiry stays for 2 years, but improving your credit profile can offset its impact within 3-6 months.
5. Should I try for a different card type after rejection?
Yes, consider secured cards or cards with lower eligibility requirements to start building credit history gradually.
