The travel bug in you is drawn to that credit card which promises double reward point conversion to air miles, travel insurance and exclusive deals with travel partners. You have done your research online. Based on the income requirement, you qualify!
With high hopes of receiving the credit card, you submit your application altogether with all the necessary supporting documents. Fast forward a week later, you received a reject notification. The disappointment is hard to stomach.
The truth is, credit card approval depends on a number of variables and many of which are reasons pegged to your credit score given by credit rating agencies such as Credit Bureau Malaysia (CBM), CTOS or RAMCI.
Understanding Your Credit Rating
The moment you open your first bank account, the credit rating agencies will initiate a file on you to document your credit behaviour and risk profile. In the file, you will be scored from 0-900 (900 being the best score). Every time you apply, and use a banking facility such as credit card or loan, points will be added or deducted from your credit rating depending on your usage and repayment habits.
Here are top 3 reasons why your credit card application is denied:
1. Multiple Credit Card Applications
Multiple credit card or loan applications in a short period of time may not be a good idea. Everytime you apply for a credit facility, lenders will access you credit report in order to assess your creditworthiness. Having multiple banks accessing your credit report in a short period of time may trigger an alert in the credit rating algorithm — causing the system to deem that you are taking on too much debt at once. Thus, affecting your credit rating
2. High Outstanding Balance
Too much existing debts can also affect your credit score if you are unable to meet the monthly repayment requirement promptly and this may affect your new credit card application. Do reduce your total outstanding balance to increase your chances of having your new credit card approved.
3. Bad Payment History
Failing to pay your loans on time leaves a negative imprint on your credit score. Not only does this credit behaviour causes points to be deducted from your credit rating, banks would also look into your repayment history in the last 12 months when considering your credit card application.
Increase Your Chances of Successful Credit Card Application
In order to avoid the disappointment of having your credit card application denied, do download the Mobylize app. This app will provide you with a free credit rating from CBM. You will also be able to find credit card offerings that matches your current credit score on the app.