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Why was my credit card application declined?

If you've been declined a credit card, you probably won't get a satisfactory answer explaining why you were declined. Financial institutions try to avoid explaining the specific reasons as they want to keep their lending criteria a secret.

Financial institutions don't want to lose money on people who can't afford to pay back their credit cards. Therefore, financial institutions investigate you to see if you have:

• An income that allows you enough money to pay back the credit card.
• A good credit history.
• Stable employment.
• Stable living arrangements.

If you can't get the reason you were declined, by looking at the basic factors, you could discover why you may have been declined. If you suspect you know why, you can do something about it.

The Main Criteria

Your financial institution will decide if you will be able to repay the credit card according to their specific criteria. Financial institutions also take into consideration any other debts you have, such as other credit cards and loans.

Everyone has a Credit History. Financial institutions will always check your credit history by looking at your credit file before approving your credit card.

Your credit file contains the details of your credit history. This includes:

• Previous loan and credit card applications for the last 5 years.
• Current credit cards.
• Overdue accounts - also known as defaults.
• Current and previous employers.

Credit card and loan applications leave a notation in your credit file. If you have applied for several credit cards within a short period of time, this can be seen as desperate. You should keep credit card applications to a minimum. Also remember that some financial institutions will refuse your application no matter how small an overdue amount is.

Financial institutions will want to know if you have steady employment so you can afford to make your repayments. If you change jobs frequently or are still in a probation period, you may be declined.

Financial institutions sometimes consider your residential situation. Moving around on a regular basis is another potential reason that could get you declined.

What to do if your credit card application has been declined

Check your credit file before you make a credit card application and ensure all entries are accurate. Overdue accounts should be paid off immediately.

Checking your credit file is free with Veda Advantage(mycreditfile.com.au).

If you are still within a probation period at work, try waiting until your probation period ends. Some financial institutions will not consider your credit card application until you are a permanent fulltime employee.

Don't be too troubled if you are declined a credit card. You will have opportunity to apply again soon.

To prepare for your next credit card application consider:

• Compare all Credit Cards to find the best one for you, or
• Find the Best Credit Cards, or
• Consider aLow Interest Credit Card, or
• Find a Credit Card Rewards Program that suits your spending needs.

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