4 reasons banks reject credit card applications
This article was originally on GET.com at: 4 Possible Reasons Why Your Credit Card Applications Were Rejected
People in Singapore have a love affair with credit cards. According to statistics from the Monetary Authority of Singapore, there are 8,001,210 main credit cards and 1,476,024 supplementary cards circulating in Singapore at the end of February 2016. After all, we are transiting to a cashless society, or world, for that matter, and moreover, credit cards can help you save money if you know how to use them right.
If you've recently applied for a credit card, or a few credit cards for that matter, but have been unceremoniously dismissed by credit card issuers on a whim, take heart that it's not the end of the world. You can always try applying again the next time around.
But before you attempt to apply for cards again, we at GET.com reckon you think about why your application hadn't been successful so that you can prepare better for future applications. Here, we share with you 4 possible reasons why your credit card applications were rejected.
4 Reasons Why Your Credit Card Applications Were Rejected
1. Your Credit Score Isn't Good Enough
In the words of Credit Bureau Singapore, a credit score is a 4-digit number based on "your past payment history on your loan accounts". Hence, it makes perfect sense that lenders assess your ability and likelihood to repay what you've borrowed, and the chances of you defaulting on loans and debts.
You know yourself best. Have you been making late payments on your bills and loans without a care for the world? Have you maxed out your credit limit?
Just so you know, the more credit cards and loan facilities you apply for, the more enquiries there'll be. Whether you like it or not, having a tad too many enquiries in your credit report is a clear indication to lenders that you're in favour of taking on more debt - never a good thing, ever.
2. Your Loan Balances Are Off The Charts
In accordance to measures that have been in effect since 1 June 2015 by The Association of Banks in Singapore, your credit line(s) will be suspended if the aggregate interest-bearing outstanding balance on all your credit cards and unsecured credit facilities with financial institutions in Singapore go beyond 24 times your monthly income. The same applies when you are 60 days (or more) past due.
When this happens, banks are not allowed to give you new credit cards, or let you charge any new amount to your cards, or raise your credit limit on existing credit cards. This will become more stringent going forward as the borrowing limit is slated to be lowered to 18 times your monthly income from 1 June 2017 and 12 times from 1 June 2019.
When you use your credit card, make sure to pay off your bills in full and on time each month. That way, you'll only have benefits to reap from using your card. Paying just part of your bill or just the minimum payment will mean incurring interest each month - and that is a habit we strongly discourage.
Here are 4 important things you should know about credit card debt and if you're already deeply in debt, check out these ways you can find extra cash to pay off your credit card debt.
3. You Don't Make Enough Money
If you make $50k a year but are gunning for a credit card that has a stated minimum annual income of $80k, you shouldn't be surprised to receive the seemingly obnoxious rejection letter. As brutal as it may be, you have to be making enough money to be eligible for the cards you've set your eyes on.
Besides, there are a ton of good cards that only require a minimum income of $30,000. These cards are great regardless of whether you're intending to get your first credit card or whether you're looking for something more accessible despite making much more money than $30,000 per annum. You can use a credit card website like GET.com to easily compare the best credit cards in Singapore.
If you are curious, you can check out these 5 most expensive credit cards in Singapore.
4. You Haven't Been At Your Job For Long Enough
This may not be the most obvious reason that might jump out at you when you first open that rejection letter but it's true, banks would be more likely to grant you credit when they see that you have a stable work history and payroll. It only makes sense for them to scrutinize your employment history just to be on the safer side.
Frequent job-hopping and spells of unemployment are clear signs that would deter banks from granting you credit.
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