What to do when your credit card application is declined?

Personal Finance Writer · 24 September 2021
You’ve shopped around, carefully filled out the paperwork, and sent in your application for a credit card. But instead of a shiny new card, you’ve received a letter of rejection. Rather than giving up hope, it’s time to take action if you want to give yourself a better chance of success next time around.

Rejection is never easy to take, and this is perhaps especially true when it comes to financial products. You may have been sweating on having a credit card approved because you want the funds for an important purchase, or maybe you were just looking for a card to take on holiday as a source of extra cash.

Whatever the case, it’s worth knowing why your application for a credit card has been declined – and what to do next.

Why did my credit card application get declined?

If you’ve been knocked back for a credit card, it’s important to understand that it’s nothing personal. It’s more likely that you haven’t ticked all the boxes for eligibility that banks and other card issuers look for.

The list below sets out the criteria you typically need to meet to get the thumbs-up for a credit card.

Your age: You’ll need to be 18 years or older to be eligible for a credit card.

Your citizenship status: Conditions may vary slightly between card issuers but as a guide, you generally need to be an Australian or New Zealand citizen, an Australian permanent resident, or at least be able to legally work in Australia. In some cases, you may be eligible for a credit card if you hold a temporary residency visa. But other visas, such as a working holiday visa or student visa, may not get you over the line.

Your income: This is a big one for card issuers, as they want to be sure you earn enough money to manage a credit card.

Exactly how much you need to earn to be eligible for a card will differ between card issuers, the credit limit you’re looking for, and the type of card. You may be eligible for a basic credit card if you earn $15,000 to $20,000 annually, though most card providers like to see annual income of at least $30,000 to $40,000. At the top end of the scale, some premium cards require cardholders to earn as much as $150,000 annually.

Bear in mind that credit cards can be quite an expensive way to borrow money unless you pay them off in full every month, so if you aren’t sure whether your income is high enough to let you do this, it may be worth considering other options.

How long you’ve been in your current job: Again, this varies but some credit card providers want to see that you’ve been in the same job for at least six months.

Your credit score: Each of us has a personal credit score based on our credit record. This record is a report maintained by credit reporting agencies like Illion and Equifax, which essentially shows how well we’ve managed debt and bill-paying in the past. It also lists when we’ve applied for credit in the past, and whether those applications were successful, meaning applying for too many credit cards or other loans in a short space of time could damage your score.

Your credit card provider will check your credit score to gauge how well you’re likely to handle any card debt. The score you need to qualify for a credit card is determined by individual card providers, though you can check your personal credit score any time at Canstar’s Credit Score Information Hub.

Your other debts: Not surprisingly, card providers can get a little edgy if they believe credit card repayments will be jostling for attention with a line-up of other personal debts. So, you may be asked to provide statements to show how much you owe on other debts, including credit/store cards, personal loans or a home loan.

Your assets: ‘Assets’ are items of value you own, such as your home, car and personal savings. Card providers may ask to see a list of your assets before approving a credit card.

A record of bankruptcy: Your credit card provider may knock you back if you are currently bankrupt. Some may also decline your application if you have been declared bankrupt in the past.

Your track record with borrowing money: Being unable to pay back a debt is called ‘defaulting’, and it’s something a card issuer is likely to look at. If you’ve had late or missed repayments in the past, this could lead to your application for a credit card being declined.

Ultimately, each card provider will have its own lending criteria, which makes it important to shop around for a credit card. This can help you decide which provider is most likely to approve your application. Compare credit cards with Canstar.

We’ve explained a few of these factors in more detail below, and how to make sure your application is approved next time.

What are the 3 main reasons why credit applicants can be declined credit?

If you’ve been rejected for a credit card, you should receive a response from the card provider explaining why. If you don’t, you are entitled to ask why you were knocked back. It’s a step worth taking as it can help plan ahead to have more success with future credit card or other credit applications.

In general, there tends to be three main reasons why people are declined for credit.

  • Your credit report may have incorrect information

Errors can creep into our personal credit reports over time, and this will impact your ability to secure credit. That’s why it’s worth taking a look at your credit report to be sure everything is accurate and up to date before applying for any sort of credit.

Credit reporting agency Equifax says that if you’ve been declined credit as a result of the details in your credit report, the lender should give you details of the credit reporting body it uses. From here you can contact the agency to request a copy of your report, and ask for any incorrect details to be corrected.

  • Capacity to service the debt

Card providers are required by law to be confident you can manage any loans or credit cards before approving your application. If the lender feels your income is too low, or you’re applying for too much credit relative to your ability to repay it, chances are your application could be rejected.

  • You’re overloaded with debt

When lenders assess credit applications they will often look at how much of your income already goes towards debt repayments. If this ‘debt to income ratio’ is starting to creep up, the lender may say ‘no’ to extending you more credit. That’s not always a bad thing. The last thing anyone needs is to be lumbered with unmanageable debt.

Can I apply for a credit card that declined me?

Getting the thumbs down for a credit card can be disheartening. But the good news is there are steps you can take to boost the likelihood of approval next time around.

This is why it’s worth having a chat with the card provider who’s turned you down. Once you know the problem, you can look at ways to fix the issue.

That said, it’s important not to launch into another application straight away. Each application you make for credit is noted on your credit record – something that as we’ve seen, lenders are eager to take a look at. When a large number of credit applications appear on your credit record, lenders may start asking why.

A better strategy is to give yourself breathing space to work out why your application was declined and work on improving your chances for future applications. This can also buy you time to shop around and decide whether you want to reapply for the same credit card, or if you could get a better deal elsewhere.

In the meantime, there are several steps you can take to boost your chances of getting the green light for a credit card in future. The first is to stay in the same job – lenders normally like to see a record of job stability.

If your income is the sticking point, think about ways you can pick up a bit of extra cash, either through overtime or maybe starting a side hustle. This can give your income an uptick and help you grow savings, both of which may strengthen your application with a card provider.

It can also help to trim back any other debts. Remember, the more you owe, the more likely it is you could be turned down for a credit card in future. So, use the time before making another credit card application to knuckle down and pay down debt.

Why am I not getting approved for credit cards?

If multiple attempts to gain a new credit card have failed, it could be time to rethink whether a credit card is the right option for you.

If you’re really struggling to get approval for a card or for another credit product, it could be that there are a few black marks on your credit record, or that you’re simply juggling too much debt. If it’s proving a struggle to get on top of existing debts, you may want to talk to a financial counsellor for free, confidential advice on strategies to get your finances in better shape. You can call the National Debt Helpline on 1800 007 007 to get started.

Cover image source: fizkes/Shutterstock.com

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This content was reviewed by Sub Editor Tom Letts as part of our fact-checking process.

Nicola is a personal finance writer with nearly two decades of industry experience. A former chartered accountant, who holds a Bachelor of Commerce and a Master of Education degree, Nicola has contributed to several popular magazines including the Australian Women’s Weekly, Money and Real Living.

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