We all have experienced getting rejected before, after a job interview, by someone we admire…but getting rejected by a bank can truly hurt!
If you have ever had your credit card application declined by a bank before, don’t be so quick to give up. Getting rejected once does not mean you are entirely not eligible. There might have been an overlooked mistake or a criterion that you missed while applying.
Here are some common reasons a credit card application gets rejected.
1. Not Meeting the Requirements
Banks are becoming more creative with their credit card rewards. Once tempted by all the free gifts, cashbacks, rebates, etc., an applicant may sign up without carefully checking the eligibility requirements. You need to properly ensure you meet the criteria such as minimum wage, age, employment status to ease the following processes.
2. Missing Documents and Information
It is not uncommon to make mistakes in application forms, even for adults. Especially when dealing with banks and government agencies, you will be asked for various documentations to support your application. For a credit card, you will usually be asked to attach your most recent EPF statement along with a copy of your IC. Be sure to prepare all necessary documents accordingly.
3. Unstable Income
Earning a steady income is one of the most essential requirements for a bank’s approval. Banks will make sure the applicant is able to consistently repay their debts before approving their applications. If you have only started working, or have been unemployed for a while, it is wise to wait at least 6 months into the new job to prove a consistent income flow before applying for a credit card.
4. You Already Own Too Many Cards
Bank Negara Malaysia has set a limit for individuals earning below RM36,000 annually to own only 2 credit cards maximum. If you have reached this limit, you will need to cancel 1 first before applying for another.
5. DSR (Debt Service Ratio)
If you already have too many commitments on your hand, that will be reflected in your Debt Service Ratio (DSR). Besides credit scores, banks also rely on DSRs to decide whether or not to approve or reject an application. The recommended DSR to get easier credit approval is not more than 70% (for net income of RM3k and above) 0r 60% (for net income of RM3k and below). You can refer to this to calculate your DSR.
6. Too Many Credit Card Applications at the Same Time
Perhaps one may assume that applying for multiple cards at the same time increases your chance of getting approved, almost as if one gets rejected, there will be another as backup. This is a misconception as every application is recorded in your CCRIS report. If you have made many applications, and many of them also get rejected, it might seem as if you have a bad credit score. Therefore, it is better to wait around 3 to 6 months to apply for a credit card again if your recent application gets rejected.
7. Failing to Check Credit Score Before Applying
Lastly, even if you have met and double-checked all requirements and documents, this is still no guarantee for an approval. The most important criterion for approval is the evidence that you will repay the debt consistently, and this is proven by what is reported in your CCRIS & CTOS report. Having some credit score imperfections in your credit report puts you at high risk of getting rejected. There should not be any outstanding debt repayments or bills within 6 months before applying.
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