Here’s Why Your Credit Card Application Was Rejected
Rejection stings, no matter where it comes from. If a rejected credit card application has left you confused and disappointed, fret not – once you identify the reason(s) why your application has been rejected, you can start to turn things around.
Here are the top reasons why a credit card application may be rejected:
1. You don’t meet the minimum income requirements
In Singapore, the minimum annual income requirement to apply for any credit card is S$30,000. However, each card has a specific income requirement you’ll have to meet, so make sure you fulfil the minimum income requirement being sending in an application.
You can chat with iMoney’s Intelligent Agent now to find the best credit card that suits your income (not a fan of phone conversations? Don’t worry – you’ll get your recommendations on Facebook chat within minutes).
2. You don’t have a stable source of income
To get your application approved, you’ll need to prove to banks that you’ve got a stable source of income to pay off debts. Long spells of unemployment or a history of job-hopping may indicate that you don’t (or won’t) have a reliable source of income.
As such, if you’re new to the workforce or have just moved to a new job, you should wait at least a few months in your job before applying for a credit card. Credit card applications may require you to submit your latest 3 computerised payslips. If you’re self-employed or earn a commission-based salary, you may need to submit your latest 2 years’ Notice of Assessment instead.
3. Your credit score is too low
Your credit score is a number used by lenders to assess how able you are to repay your debts. Your credit history from all major financial institutions is aggregated into this score. The score ranges from 1000 to 2000 – the higher the number, the better your credit score is:
|Score range||Risk grade||Probability of default|
|1911 – 2000||AA||0.00%||0.27%|
|1844 – 1910||BB||0.27%||0.67%|
|1825 – 1843||CC||0.67%||0.88%|
|1813 – 1824||DD||0.88%||1.03%|
|1782 – 1812||EE||1.03%||1.58%|
|1755 – 1781||FF||1.58%||2.28%|
|1724 – 1754||GG||2.28%||3.46%|
|1000 - 1723||HH||3.46%||100.00%|
You can purchase a copy of your credit report at Credit Bureau Singapore for S$6.42.
Your credit score is one way the bank will assess your eligibility for a credit card application, so watch out for these factors that can adversely affect it:
- Too many credit card or loan applications. Every time a bank (or a financial institution) pulls out your credit report to determine your eligibility for a credit card or loan application, an enquiry is placed on your file. Having too many enquiries can signal to banks that you could be taking on more debt that you should, dissuading banks from approving your application.
- History of late or missed payments. Paying your debts off late (or making partial payments, or missing them altogether) will signal to banks that you might not be able to pay off future debts.
- High credit utilisation. Even if you’re paying all your debts on time, you should limit how much credit you use on your existing credit cards. Aim to keep your utilisation below 30% – this means that if you have a card with a S$10,000 credit limit, avoid using more than S$3,000 on it. A high credit utilisation could hurt your credit score, and signal to banks that you will have trouble paying off debt if you take on more of it.
- Bankruptcy. We hope this one’s obvious enough that it doesn’t come as a surprise to anyone. Bankruptcy will severely affect your credit score, making it difficult for you to obtain a loan, mortgage or credit card. Even if you are discharged from bankruptcy, your bankruptcy data will be retained on your credit report for 5 years from the date of discharge.
- Pay the full balance of your bills on time. Making timely payments is an effective way to improve your credit score. Your recent payment history will carry more weight than older transactions, so it’s worth getting into the habit of making prompt payments.
- Limit the number of credit cards you own. Credit cards offer lots of advantages and opportunities to save money. It might be tempting to apply for as many as you can to reap their benefits, but doing so can hurt your credit score and make it hard to keep track of all your debts. Instead, apply for the best credit cards that suit your needs and lifestyle. You can find them through iMoney’s Credit Card SmartSearch or through iMoney’s Intelligent Agent.
- Cancel unused credit cards. If you have many credit cards, cancel the ones that you do not use, or do not use often. However, it would be advisable to keep older cards, as a long record of payments will improve your credit score.
- Space out credit card applications or loan enquires. Don’t sign up for many credit cards or loans at once. It is advisable to wait a few months between applications.
4. Your application was incomplete
Filling out an application form may seem like a straightforward process, but if you’ve accidentally missed out important information, entered incorrect details or didn’t attach all the necessary documents, your application may be rejected.
Applying for a credit card online can help minimise human error, as online forms can prompt you if you’ve left out mandatory fields.
Remember to attach all necessary documents as well. You may need to provide the following in your application:
- Front and back copy of NRIC
- Latest 6 to 12 months CPF statement
- Latest 1 to 2 years’ Income Tax Notice of Assessment
- Latest computerised payslips
- A valid passport and an Employment Pass (if you are a foreigner)
If your credit card application has been rejected, do not despair. Once you’ve identified the possible reason(s) why your application was rejected, you can take steps to rectify them and improve your chances of approval. Remember to wait a few months before your next application as well. Good luck!