Between Jan2016-Jun2016, non-performing assets (NPA) of banks have risen according to the reports. And Indian banks now have NPAs close to 6 Lakh Crore i.e bad loans. So application for any type of credit is now scrutinized minutely by financial institutions in order to prevent grant of credit to predicted, frequent defaulters or the ones who do not fit eligibility criteria of the bank.

So what should you do when credit card application is rejected?

First of all, do not worry and take action without giving any thought. And also do not think that you will never get a card again. Normally upon card rejection, the next step everyone takes is to immediately make application at some other lender. But this is not recommended.

Here’s why and what you should do instead:

Ask for a reason: The first important step is to contact the concerned lender and ask for the reason for card denial. Now, there could be many reasons such as poor credit score, incorrect details mentioned, improper documentation, etc. If there is a minor mistake from your end, for e.g. if you forget to submit salary slip or mention incorrect salary, then ask lender to reconsider your request after providing the correct details.

Work on improving credit: If the reason for denial is poor credit score which can be due to multiple reasons; common ones are late, delayed, or missed payment, then your first job is to start working on improving the credit score. Your whole financial future is dependent on CIBIL score. A poor score will always create hindrance in getting any type of credit. The most recommended solution for improving CIBIL score is to make repayments on time and fully. Stay away from the habit of paying minimum balance. Also spend card wisely without crossing the card limit. Your aim should be to reach CIBIL score of 750 and above.

Apply only for card which you are eligible for: Market is flooded with various cards with each offering different features and benefits. And it is obvious that everyone will get attracted towards card offering exciting benefits such as lounge access, free air miles etc. But many such cards are designed for individuals with high income/frequent traveler/businessman & others. So if your card was rejected due to any of these reasons then next time check eligibility criteria first and then apply for a card. Remember every rejection counts.

If mistake is from bank’s end: Do you know that many a times, mistake at bank’s end can also result in card rejection? This could be due to various reasons. The most common one is delay in updating CIBIL record or incorrect data sent to CIBIL. As per rule, bank has to submit data to CIBIL every 30-45 days. Suppose you closed your previous loan account by paying all dues in June and apply for a fresh card in September. But if previous bank do not send recent data of your card account closure before you apply for the card at the new bank, then denial chances increases since you are still have balance dues as per credit information report at CIBIL.

In India, there are other options as well in case normal application still gets denied and these options are: add-on cards and credit card against fixed deposit also known as secured card.

Before applying for a card, get credit information report from CIBIL:

Next time you apply for a card, first check your credit score, and then take decision to apply for a new card. This way you can estimate whether or not it makes sense to apply for a card and which card. Else opt for add-on cards or secured credit cards. You won’t end up in the list of card denied. In case of any errors in CIBIL report, you can raise a dispute which they will try to correct at their own end or forward to the concerned lender.