The credit card is considered one of the most popular banking products. It provides quick access to borrowed funds that can be used to pay for purchases or other means. Unfortunately, not everyone can get low-income credit cards. So today we will find out why banks won’t give you a credit card?
Problems with credit history
Problems should be understood as a blemished credit history. This is the most common reason why banks refuse loans. The credit history is a detailed file of the borrower, which keeps information on his payment discipline: the loans he has previously contracted with banks and financial companies, with a record of the amounts, dates of all payments and any late payments. Banks send this data to credit bureaus, which collect it.
Before a bank grants a loan to a customer, it assesses their creditworthiness and ability to pay. Customers with a damaged credit history, where there are delinquencies and “frozen” loans are blocked. What to do: If your credit history is terrible, you need to fix it. First, you need to figure out exactly what’s wrong.
Errors in credit history. Why do they appear and how to fix them.
If the bank doesn’t like something, but you know all of your loans were closed on time, there’s likely a mistake. Here’s an easy one. Check your history, find the error and file a fake report. You can use it to contact the specific office or bank that sent incorrect information about you.
It is much more complicated if the fault of the borrower corrupts the history. Only a good disc can correct a bad one. It won’t be easy to get it, but it is possible. You will need to take out new loans and repay them on time. Online lending companies can help because they don’t have such strict requirements for borrowers.
Each bank has its own rules. Some lend from the age of 18. Others must be at least 21 years old and others must be 23 and over. The same goes for the age limit. In some banks it is 60 years. In others – 65, 70 years. If the customer’s bank understanding does not match the age, it will be rejected.
What to do: find a bank more loyal to young or old borrowers. If you are denied a loan at one bank, move on to the next one. You can apply for a loan online from microfinance companies that work with credit bureaus as a last resort. They are usually not as mushy as banks. Moreover, some grant the first loan almost free of charge (at 0.01%). So you can start a good credit history and count on the goodwill of other lenders in the future.
No proof of income
Many banks require a potential customer to produce proof of income from his place of work. This statement assumes that the person is officially employed and that not everyone has an official job. Today many people are paid in an envelope. In some banks, these customers will be refused credit.
What to do: try to convince the bank of your solvency. Banks are adapting to the reality in which they have to operate. They are aware that there are many creditworthy customers among those who cannot provide proof of income. And many are willing to work with them.
The main thing is not to deceive the bank by pulling fake certificates. Its security service will detect a false diploma, and you will be placed on the “black list” of fraudsters. Then you can forget about loans in this and other institutions.
Lack of registration (residence permit)
It can also be a good reason for refusing a loan for many banks.
What to do: show documents confirming your creditworthiness or take out a loan online. The lack of a residence permit can be mitigated by documents confirming your solvency: ownership of real estate or a car. If you don’t have a residence permit but own your apartment, the bank might turn a blind eye.
Another option is to apply for a loan online from a microfinance company. For them, the absence of residence registration is not an argument for not granting a loan. The high interest rates at which they grant their loans more than compensate for the risk of non-payment. That is why they are ready to forgive borrowers for not having a certificate of income or registration.
Errors and inaccuracies in filling out the form
Do not worry; the bank will carefully check everything you tell them about yourself. Any error or inaccuracy in filling out the form may result in the rejection of the loan. For example, if you confuse a digit in the home phone number, you may inadvertently specify the number, which appears as an office number in the bank’s database. The error in the series or number of your passport may cause you to indicate an invalid or lost document, and you may be considered a fraud. If you put a wrong or invalid phone number of a person you know or a relative in the application form, the same will happen.
What to do:
- Carefully check everything you put in the app.
- Give only accurate information.
- Notify your friends or relatives whose phone numbers are mentioned in the application form that the bank may call them.
Conclusions and Recommendations
If you are refused a loan, find out the exact reason from the bank manager. There is a small chance that you will be told. And if you don’t know the reason, it makes sense to go through these items in detail. Most often the reason lies in one of them.
Before taking out a new loan, this is worth:
- Check your credit history;
- Complete a credit application carefully, indicating only valid data;
- To warn your relatives, whose telephone numbers you indicated in the application form, that the bank could call them.
You can probably get a credit card if you have a low income. The main thing is to carefully check the form and correctness of the data.