Download the latest issue of Business Today Magazine just for Rs.49
Alternative ways to become a credit-card holder

Alternative ways to become a credit-card holder

Banks may reject your credit card application on various grounds. Know the alternative ways in which you can still become a card-holder.

Neha Arora, an executive with a private firm in Secunderabad, applied for a credit card after much persuasion by a sales person from a bank. Neha submitted all necessary documents and she thought she would finally be owning a credit card.

However, a few days later she got a call from the bank's customer care that her application has been rejected. On her request to reveal the grounds for rejection, the bank failed to give a convincing answer.

Though it is common for credit card companies to reject applications from card seekers on various grounds, what baffles many is their reluctance to give proper explanation for declining the application.

SAFETY TIP: Banks decline telephonic transaction, new password in place

The reasons for rejection could be many including the applicant's poor credit history, low salary, area of residence and even the fact that the company where one works is not listed on a stock exchanges.

However, rejection from one credit card issuer does not mean the end of the road for you. There are many ways to correct the 'wrong'. We will discuss in this article the possible reasons for rejection of credit card applications and the way out in case of rejection.

"Past behaviour becomes an important element in evaluating your credit card application."
Arvind Hali
Head (Retail assets & credit cards), Dhanlaxmi Bank

The eligibility norms for getting a credit card is more or less same across different issuers. The minimum income requirement for both salaried and self-employed to own a basic credit card (called gold/silver card in most cases) is Rs 1,50,000-1,80,000 a year.

However, credit card issuers may do more due diligence in case of self-employed applicants owing to higher volatility of income. Banks may ask for different income proofs such as tax return documents for the last 2-3 years, and other business details such as client list and orders in hands.

Satkam Divya, business head,, says that compared to salaried persons, banks usually set higher eligibility benchmarks for self-employed customers to accommodate higher risks resulting from fluctuations in their future incomes.

SAFETY TIP: Find out your investor profile

"For a self-employed person, the income criterion is generally higher than that for salaried applicants. He should furnish three-year documents of income tax returns, should have a good credit score, should already own a credit card and own a vehicle, and his business should have reasonable credibility," says Rishi Mehra, co-founder and chief operating officer, Deal4loans.

The minimum age required to own a card is 18 years. Many issuers also set an upper age limit of 65-70 years.

1.6% is the decline in number of credit cards in 2010-11

13% is the growth in the number of credit card transactions in 2010-11
The most important criterion though is a good credit history. What it means is that you should not have defaulted on any previous loans or debt from banks or other financial institutions.

"The customer is required to maintain a good credit history with multiple credit bureaus. Past behaviour becomes an important element in evaluating the applicant and therefore, gets classified as minimum criteria for getting a credit card," says Arvind Hali, head, retail assets and credit cards group, Dhanlaxmi Bank.

Staying one up
We will discuss the reasons for rejection of your credit card applications and the alternative ways to get a credit card in case of rejection.

DEFAULT HISTORY: Banks and financial institutions, with the help of credit information companies such as CIBIL and Experian, share the credit history of every client with other lenders. If you defaulted on any dues in the past, it is likely that you have received a low credit score, which means getting loans and credit cards would become tough for you.

There have been cases when a small unpaid amount (unknowingly ignored) on your previous credit card (which you have ceased to use) resulted in large dues over months due to accumulating interest during the period.

SAFETY TIP: Why fee-based credit cards are a good deal too

In such cases, if you don't pay up and close the card properly, you may end up earning poor credit scores. In some cases, if any of your close relatives have also a history of defaults, you may be denied a credit card by the issuing company.

The way out: The above situation is like a vicious circle. You need to improve your credit history to get a loan but unless you are given any loan, you cannot improve your credit score.

There are many banks which would give you a credit card against fixed deposits. These are secured credit cards with credit limit equal to the amount of fixed deposit you have with the bank.

This arrangement has dual benefits. You get a credit card and you get a chance to improve your credit history by paying your dues in time.

NO REPAYMENT TRACK RECORD: Sometimes your credit card application may get rejected simply because you do not have a repayment history. It is possible that you never owned a credit card or took any loan and hence you do not have a credit history at all.

According to Rishi Mehra of, banks now-a-days have become very particular about credit history of applicants and if they don't have a repayment history, getting a credit card becomes tough.

The way out: If you have a salary account or a normal savings account with a bank and you have a long relationship with the bank, it is possible that your bank may consider your application.

"It is all about how much information the bank has about you. The longer and the deeper the relationship, the better the chances of getting a credit card from that bank," says Subrat Pani, business head, credit cards, Kotak Mahindra Bank.

WORKING IN NON-LISTED COMPANIES: Employees of non-listed companies may face problems getting credit cards issued as "banks perceive a higher risk lending to people employed in such firms as they reckon these employments may not have a stable income," says Satkam Divya of


Poor Credit History:
Solutions: Go for a secured credit card against fixed deposits in banks. The credit limit on the card is equal to the amount of the deposit.

No Repayment Track Record:
Solutions: Apply for a credit card with a bank where you have a salary or a normal savings account and you have a long relationship with it.

Working In Non-Listed Company:
Solutions: Apply with a bank where you have your salary account; You can get a co-branded card if you are a loyal customer of a retail outlet or an airline.

Profession Or Area Blacklisted:
Solutions: Though with the availability credit score, this practice is on the decline, you can go for a secured credit card against bank FDs.
There are other risks associated with employees of unlisted private companies such as income fluctuations, designation exaggeration and unemployment due to sudden closure of the units.

"A person who is not working with a listed company may face difficulties in getting a credit card if he doesn't have a proven repayment track record," says Harsh Roongta, CEO,

The way out: Banks may consider your case if you have a good credit history and high regular income. If your application has been rejected purely because you work with a non-listed company, your habit of splurging in large retail outlets and frequent air travels could help you fetch a credit card.

Many banks have tied up with large retailers airlines and oil marketing companies to launch co-branded cards. If you are a loyal customer of any of these companies, you may avail a co-branded card.

'BLACKLISTED' PROFESSION OR AREA OF RESIDENCE: Banks try to put it more politely by saying that certain profile of people and areas are in the non-target list 'depending on variety of factors from behaviour of certain profiles and areas in terms of their credit performance to the ease of servicing such areas.'

If you happen to be a journalist, lawyer or a cop, your credit card application is most likely to be rejected. Same if you reside in a 'blacklisted area' of the city.

The way out: While this practice is fast on decline with banks having the easy access of applicants' repayment track records, if your application has been rejected on the above grounds, you can opt for a credit card against bank FD route mentioned earlier.

There could be other reasons for rejections but the key is to keep your slate clean on repayments and have a sound credit history.