Don’t understand why your credit card application was rejected? Learn how to improve your application and increase your chances of approval next time
When your credit card application is rejected, the bank doesn’t usually explain why you weren’t approved. This can make it difficult if you want to apply for another card but aren’t sure how you can improve your chances of approval.
As each rejection will put a negative mark on your credit history and could decrease your chances of future approval, it’s important that you get your head around common application issues before you get started. Here, we’ve outlined the main reasons why credit card applications are rejected and provided some tips to help increase your chances of approval next time.
Compare low rate credit cards
Rates last updated November 24th, 2016
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Balance transfer rate (p.a.)
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ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a.
$0 p.a.
11.99% p.a.
$25,000
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ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months. Also, enjoy an annual fee waiver in the first year.
0% p.a. for 3 months (reverts to 19.74% p.a.)
0% p.a. for 12 months
$0 p.a. annual fee for the first year ($87 p.a. thereafter)
21.49% p.a.
$35,000
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Westpac Low Rate Card
A no frills credit card with an introductory rate of 0% p.a. for 16 months on balance transfers and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.49% p.a.)
0% p.a. for 16 months
$59 p.a.
21.49% p.a.
$15,000
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ANZ Low Rate
$100 Back plus 0% p.a. for the first 6 months on purchases from approval.
0% p.a. for 6 months (reverts to 13.49% p.a.)
$58 p.a.
21.74% p.a.
$15,000
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ANZ First Visa Credit Card
Enjoy 0% p.a. balance transfer rate for the first 18 months, a low annual fee, interest-free days on purchases and a low minimum credit limit.
19.74% p.a.
0% p.a. for 18 months with 3% balance transfer fee
$30 p.a.
21.49% p.a.
$15,000
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Coles Low Rate MasterCard
A low rate MasterCard with a competitive rate on purchases and a low annual fee.
9.99% p.a.
0% p.a. for 6 months
$49 p.a.
19.99% p.a.
$25,000
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ANZ Frequent Flyer
Receive 25,000 bonus Qantas Points after your first eligible purchase is made within 3 months of card approval, enjoy easy payments using Apple Pay and earn 1 Qantas Point per dollar spent.
19.99% p.a.
$95 p.a.
21.49% p.a.
$15,000
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ANZ Rewards Credit Card
Get 25,000 bonus Reward Points after your first eligible purchase is made within 3 months of card approval and earn 1.5 points per dollar spent.
18.79% p.a.
$80 p.a.
20.99% p.a.
$15,000
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Virgin No Annual Fee Credit Card
No annual fee for the life of the card with $100 cashback and a 0% p.a. offer on balance transfers for 18 months. Spend criteria applies for cashback offer. Plus $100 cashback offer when spend criteria is met.
18.99% p.a.
0% p.a. for 18 months with 2% balance transfer fee
$0 p.a.
20.99% p.a.
$25,000
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Why was your credit card application rejected?
You filled out your application form incorrectly
You risk being rejected if your application contains incorrect information or is missing key details. The good thing about most online credit card applications is that they will not accept your submission with any missing fields. But if you realise you’ve made a mistake in your application after it’s submitted, contact the card company immediately and request that they amend it.
You don’t meet the age requirement
You must be at least 18 years of age to apply for a credit card in Australia. If you don’t meet this requirement, you application will automatically be declined. In some cases, additional cardholders must also meet minimum age requirements that are different to the primary cardholder. Make sure you check these details as well, because they could affect your application if you apply to have someone else use the account and they’re not eligible.
You don’t meet the citizenship or residency requirement.
Some cards cater for temporary residents, but most cards require that you are an Australian citizen or permanent resident. Check and make sure you satisfy the stated requirements before applying, even if it means calling the issuer first.
Your income doesn’t meet the minimum requirement
Different credit cards have different income limits. To ensure that you don’t take on more credit than you can afford, check the minimum income requirement for your credit card before applying. To prove your income, make sure you provide recent copies of payslips and proof of employment.
You applied for an unrealistic credit limit.
It is possible that your application was rejected because you asked for a credit limit that was too high, even though you could have qualified for a lower credit limit. It may be prudent to request a lower credit limit to start with, and then work your way up from there. If you have a good track record of repaying your balances, card companies are usually happy to increase your credit limit after you’ve had the account for a while.
You already have too much debt
If you haven’t been paying off your existing loan balances in a timely and responsible fashion, credit card issuers will be reluctant to grant you even more credit. Before you apply for another credit card, pay off some of your existing debts to prove you are a responsible borrower. If you’re struggling with high interest, consider a balance transfer card that’ll let you pay down your debt faster without the cost of interest.
You already have too many credit cards.
Yes, there’s such a thing as too many, and credit card companies get nervous if you’re applying for more credit when you already have a lot of available credit. But before you go cutting up those cards, carefully consider which ones to keep. If you have several cards, it might be wise to consolidate your existing debt under a balance transfer credit card. Not only will this make it easier to pay down your debt, it will also reduce the number of active credit accounts on your record.
Your public record isn’t pristine
Court records like bankruptcy, tax liens and some civil judgments can also factor into why your credit card application was rejected. Unpaid debts will stay on your credit report longer than paid ones, but fortunately with time all public records generally lose their impact on your credit file.
Your credit file shows too many credit inquiries
Each time you apply for any form of credit, the credit provider will request a copy of your credit file for assessment purposes. Every time this happens, a new credit inquiry is recorded on your file. Credit inquiries are not favourably viewed by future credit providers, and too many credit inquiries can sink you into a vicious cycle of more rejected credit applications.
You have applied for too many cards in a short amount of time
This point relates to your credit history, but it’s worth noting separately that some banks will even automatically reject your application if you apply for another card within a week of your previous application. Aim to always wait a few months between applications.
You have poor/short/unstable credit history
Before you apply, consider getting a copy of your own credit file to check that you have a good chance of being approved. Even if you don’t have terrible payment defaults or late payments marked on your credit file, a short credit history does not convey the stability that lenders are looking for. If you find yourself in this position, take small steps to build up your credit history, such as by getting a mobile phone or utilities in your name. Make sure you pay your bills on time to establish a good track record for yourself before you apply for another credit card.
Your employment circumstances are not ideal
Lenders are looking to see that you have stable, ongoing employment to help meet the repayments for your new credit card. If you have only temporary, casual or part-time work, you may find it hard to get approved for some credit cards. Constantly switching jobs is usually red-flagged too.
Your financial position is risky
When filling out your card application, you have to provide information about your income and expenses. This is to help lenders assess your ability to meet repayments, but can certainly backfire if you list a lot more expenses than income.
Your housing situation is unstable
Some credit card firms even scrutinise your housing situation. In this instance, you could be considered a risky borrower if you have frequent changes in address or if you’ve just settled into a new home.
Learn how to check on your Credit Card Application
Case Study: Credit Card Finder User | Jennifer
"I applied for Commonwealth and Qantas American Express cards recently, and both applications were rejected. I don’t really understand why. I’m earning about $63,000 a year, I have no mortgage, and strangely enough, a flawless credit history. The most irritating thing is neither firm explained why I was rejected. Do you have any suggestions?"
Like Jennifer, many of our users have had their applications denied without any apparent reason. Our first suggestion is to check your credit file for negative listings that could have affected your application. If your credit file is clean, like Jennifer’s, we’d suggest having a look at your existing credit card accounts and calculating your debt-to-income and credit utilisation ratios. These ratios relate to your income and debt levels – if they’re too high, you have less chance of being approved for new credit.
In Jennifer’s case, we found that even though she was regularly paying off her monthly balances, her debt-to-income and credit utilisation ratios were both consistently high at about 60%. This is because she was carrying a consistent balance on her existing credit card of about $3,000 a month, which was approximately 60% of her monthly salary, and also 60% of her current $5,000 credit limit. As such, it seems likely that the credit card company had low confidence that Jennifer could take on any more credit.
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Tips for getting your credit card application approved
Regularly check your credit report. Review your credit history by requesting a free copy of your credit report. If it isn’t perfect, identify the negative listings. Clerical errors are not uncommon, so if you find anything odd in your credit report, contact the relevant Credit Reporting Body (CRB) and request an investigation and correction.
Thoroughly investigate the decision. If you’ve received an application rejection and don’t understand why, take it upon yourself to find out. For starters, you may wish to call the card company and simply ask why. You have nothing to lose, and you may even gain some insight as to what went wrong.
Identify your problem and fix it. Use the list in the previous section to help you identify where your application might have gone wrong. Once you’ve figured out where your application or credit file needs improvement, you may be able to rectify it and make the necessary improvements before applying for another credit card.
Learn about credit repair: How to remove black marks and defaults against your name
Watch your credit utilisation ratio. Your credit utilisation ratio factors into your credit score and application assessment. This ratio is calculated by dividing your existing credit card balance by your available credit limit. High credit card balances are very damaging to your application because a healthy credit utilisation ratio shouldn’t exceed 30%. This means that if your available credit limit is $10,000, you should only be carrying a $3,000 balance on the card at most. To lower this ratio, you should pay down your existing balance as soon and as often as possible, more than once a month if need be.
Improve your debt-to-income ratio. This is the amount of debt you have compared to your income. For example, if you earn $50,000 a year and have $5,000 debt on a credit card, that’s 10% of your income. Credit card providers use this information as a general indication of your ability to repay debt. To improve your ratio, aim to pay down your debts and include all sources of income in your application. Some people forget to list dividend income or part-time and casual income thinking that it doesn’t matter when it really does.
Demonstrate a good savings history. This is especially helpful if you plan on applying for a credit card with your bank. Having a savings account where regular salary deposits are made can improve your internal bank credit rating – and your chances of credit card application approval in future.
Demonstrate responsible repayment behavior. If your credit report is riddled with late or overdue payments and defaults, there is no quick way to fix this. You will need to show that you can be a responsible borrower by making prompt and full payments over time. Once you have built up new history that shows you are a responsible lender, you will have a greater chance of getting your credit card application approved.
Consider engaging a credit repair specialist. If you discover a number of negative listings in your credit file and don’t know how to fix them, you could pay to a credit repair service look into your file for you. This could be costly but you may find that the price for having clean credit is worth paying. But do note that credit repair can only remove listings that have been made in error or that have overstayed their legitimate period on your file. It is not a magic wand that erases all your mistakes.
Give it time before you apply again. As explained in the previous section, making too many credit card applications during a short period results in having too many credit inquiries on your credit file. This looks bad to lenders, so if you’re rejected, try giving it a rest before applying again. The longer you can wait, the better.
Having your credit card application turned down can be unpleasant, but there are things you can do to change that or to prevent it from happening again in the future. Making sure that you apply for the right card with the right eligibility fit helps, as does making sure your credit report is in good form. Sometimes, things can be even simpler. All you may need is a little time before your payment defaults disappear from your credit file!
Learn more about credit ratings
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