Why your credit card application was declined
The 8 most common reasons for not getting approved for a credit card and how you can improve your chances next time.
To get your credit card application approved, you need to prove to the bank you can meet your repayments. There are also eligibility criteria you have to meet and documents you need to provide, which means there are many reasons your application might not be approved. In fact, Finder's research shows that 8% of people have had their credit card applications declined.
Here are the most common reasons your credit card application may have been declined and what you can do to get approved next time.
8 reasons why your credit card application may be declined
1. Unsteady income or employment circumstances
Finder research shows unsteady income is the main reason people are declined for a credit card, affecting 36% of those whose applications are rejected. This is because stable, ongoing employment helps show to lenders that you can meet repayments for a new credit card.
If your employment is temporary, casual, part-time or hard to verify for some other reason, you may find it hard to get approval. If this is the case but you meet the income requirements, contact the bank beforehand to confirm if there is any additional information you need to provide to demonstrate your ability to repay.
2. Not meeting minimum income requirements
Some credit cards list a specific minimum income requirement that you must meet to apply. But even those that don't list an income amount must consider if your income could allow you to reasonably manage the card under Australia's responsible lending requirements.
If your annual earnings are less than this, your application will be declined. You can compare credit cards with low annual income requirements (between $15,000 and $25,000 p.a.) for some low-cost alternatives.
3. Incorrect information on your application
Credit card issuers need to be able to verify all of your details before they move forward with the application. Something as simple as a misspelt address or wrong digit in your licence could cause a problem. Make sure you carefully review your application before you submit it. If you make an error, you may be able to resolve it by contacting the issuer and amending your application.
4. Recent changes in your circumstances
If you have recently moved or changed jobs and haven't updated this information across all your networks, it could be hard for the issuer to verify your identity or access your credit report. As with mistakes on the application, you may be able to deal with this by calling the credit card issuer and providing additional documentation. If you include your employer's contact details in the application, you should also let them know that they may receive a call from the bank regarding your application.
5. Bad credit history
Credit card issuers in Australia only approve applicants who have a good or excellent credit score. When you apply for a credit card, the issuer will request a copy of your credit report from a credit reporting agency. Late payments, defaults, too many applications for credit, or even not enough credit history, could result in negative information on your report, and the issuer may decline your application.
Finder research has found having a bad credit score affected 21% of people who had their credit card application declined. So before you apply for a credit card, check your credit report and credit score to make sure it's in good standing.
6. Financial risks
Lenders not only look at your income when you apply for a credit card, but also your expenses. If your expenses outweigh or take up a large percentage of your income, the issuer may consider you a high-risk applicant who could struggle to repay your balance.
This includes debt, with Finder research showing 22% of people had their credit card applications declined due to having too much debt.
7. Not meeting citizenship or residency status requirements
While there are some credit cards available for temporary residents who hold a specific visa, other cards are only available for permanent residents and citizens of Australia. If you don’t meet these requirements for a particular card, you won't be approved for it.
8. Your age
You must be at least 18 years old to apply for a credit card in Australia. If you are under 18 your application will be declined. While there is no maximum age limit on credit cards, banks may decline your application based on other factors, like your income or employment.
How to improve your chances of credit card approval next time
If your credit card application has been declined, it may be because the bank has deemed you unlikely to meet your repayments. As much as you may want a credit card, it may not be the best financial decision for you at this time.
In Australia there is around $18.6 billion worth of credit card debt. While many people say they could manage their finances without a credit card, around 28% say they could not. This is where having a credit card could become dangerous, because there is a risk of ongoing debt.
If you feel that you will be able to make your repayments and you are eligible for a credit card, here are some ways you can prepare for your next application:
Wait a while before applying again
Applying for several credit cards in a short period of time leads to multiple enquiries on your credit report and can be a red flag for lenders. If you're denied, wait a few months before applying for another card. In that time, you can improve your credit score and compare your options before applying for another card.
Get a copy of your credit report
You can request a free credit report from all of the major bureaus once every year. This allows you to make sure all the details listed are current and accurate. It can also give you a better understanding of how you can improve your finances. For example, if you have multiple late payments listed, paying your bills on time could improve your credit score.
Choose a card that suits your circumstances
Make sure you can meet the eligibility criteria. For example, if you don’t earn a lot of money, you may want to look at credit cards for low-income earners. If you are retired, on a pension or self-employed, you'll need to provide additional documentation to prove whether you are eligible.
Update your details before you apply
When you check your credit history, make sure that your personal details (including residential address, phone number, email address and employment) are up to date before you apply. This will make it easier for credit card issuers to verify the information on your application.
Have your supporting documentation ready
Credit card issuers require a range of documents before they can process your application. This includes copies of your passport or driver's licence, pay slips and bank statements. This will help the bank verify your information and may speed up the approval process.
Credit card issuers require a lot of information before they can make a decision about your application. So understanding what may cause a bank to decline your application, means you can improve your chances of approval next time.
How to improve your credit score
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What is considered bad credit? Find out here and learn the steps to follow to improve your credit rating.Read more…
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Frequently asked questions
I have a high interest rate on my current credit card. I've tried to move it to another card with a balance transfer offer but my applications keep getting rejected. What should I do?
Frequent applications and rejection can hurt your credit rating. In this case, you may want to wait a few months and then find a card that suits your needs and also has eligibility requirements you can meet.
I am retired. Will this affect my application?
It depends on the card. Lenders may look at both the employment details and income of a person, which means you could still get a credit card when you are retired if you meet the minimum income requirements. You can compare credit cards for retired applicants here.
I am new at my current job. Should I wait for some time before making an application?
Card issuers generally require a minimum of 2 to 4 months of employment with your current employer. Alternatively, you may be asked to provide a letter from your employer confirming the terms of your employment and salary.
Is it harder to get approval for your first credit card?
Credit card issuers consider many different factors before approving or declining an application. While you may not have much credit history if it’s your first credit card application, other details such as your employment and income can help you get approval. You may also want to check out our guide to applying for your first credit card for more information.
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