Credit Cards

5 Reasons Why Your Credit Card Application was Denied

Thinking of applying for a new credit card? Read about these common reasons why credit card applications get rejected and how to avoid it.

If you’re applying for a new credit card, maybe even your first one, you may have a lot of questions. One major one could be: Can my credit card application get rejected? Will this hurt my credit score? What can I do to get accepted?

Credit card applications getting rejected is not something to be alarmed about. It can happen more frequently than you think, and there are definitely ways around this problem. But first, we will break down the five most common reasons why credit card applications might get declined or rejected and what you can do about it.

1. You Reached Your Credit Limit

picture of a credit card on a MacBook

For those of you who may not be familiar, a credit limit is basically a maximum spending capacity your bank sets on your credit card. This can be found in your card agreement and is usually on a per month basis. For instance, if your credit limit is S$10,000 per month, it means that if your expenses go above this value, these purchases will be denied and your credit score might fall.

You might be wondering: why do banks care when I’m not technically defaulting my loans and I pay back all the money on time? Think about it this way. Would you lend money to a friend who is known to owe S$10,000 to another person?

The best practice is to ensure that your spending does not go above 30% of your credit limit for each card. Once you hit the 50% mark, you’re in the danger zone. Banks may consider you a flight risk and this will cause your credit score to take a hit. This will in turn, play a role in the rejection of your credit card application.

Solution: Before applying for a new credit card, take a few months to adjust your spending habits and rack up a good credit score. Stick to the 30% rule and you should be fine. After that you can apply again and be confident in your application being accepted.

2. Your Loan Balances Are Too High

picture of a model house, piggy bank and a magnifying glass on a document

If you’re recently taken out a loan to make a big purchase like getting a new house (congratulations by the way!), your loan balance might be a bit too high for card issuers to give you a new credit card just yet.

In a way, credit cards are like mini-loans, you make purchases using the bank’s money first before paying it back. Having existing debt is bound to make banks slightly hesitant to lend you more money. Same idea as before: would you lend money to a friend who doesn’t have enough to pay off their house and car?

Solution: Slowly begin to pay off your existing loans before applying for a credit card again. Consider paying off your loan early if you have the funds available but the bottom line is this: repay your debts on time and you’ll be well on your way to getting your next application accepted.

3. Your Credit Score is Too Low

2 people having a meeting at a table

One of the easiest ways to get your credit card application denied is to have bad credit.

A credit score is essentially a bank’s way of ranking its customers in terms of how likely they are to pay back their loans, with AA being a gold star client who pays everything back on time and HH being you are more likely to default than anything.

Each credit card has a suitable credit score range, meaning that cards are typically only issued to those with credit that falls within the boundary. If you’re known to not be able to pay back money on time, financial institutes would be hesitant to loan you even more.

Solution: There are many ways to build up your credit score, and fast. Some have even gone from a DD to an AA score rating in 6 months. There are many ways to fix a bad credit score and you’ll be able to secure a new credit card before you know it.

Read Also: Why Your Credit Score is Holding You Back & How to Fix It.

4. Your Salary Doesn’t Meet Requirements

hand holding up 100 dollar notes

Most credit cards on the market today come with a minimum income requirement. This is another type of insurance that credit card providers use to ensure that you do not end up defaulting your loans.

While you can still be an irresponsible card user with a high income and a reliable customer with a lower income, most providers would think of a lower income client as more risk prone and may hesitate to approve their credit card application.

Solution: Consider alternative options.

If you are a student or young adult that recently graduated, you might be hard pressed to meet requirements of most credit card companies. However, there are certain credit cards designed for a younger clientele, and this means the income requirement for these cards would be much more lax. For students, the Maybank eVibes credit card and the CIMB AWSM credit card are two of the best offerings on the market. The Maybank eVibes card offers the best flat cash rebate for students while the CIMB AWSM card had unlimited cashback on certain categories of spending, making it ideal for the supersaver. Both are great options for those looking to get their first credit cards soon.

Maybank eVibes Credit Card

Maybank eVibes Card is an easy to use student card offering 1% cash rebates on all retail transactions. Another benefit: S$20 annual fee waived for 2 years.
  • Pros
    • Students & NSF earning less than S$30,000/year
    • People looking for easy cashback on all spend
    • Individuals hoping to avoid paying an annual fee
    • Cons
      • Young adults who’d prefer a card with EZ-Link functionality

      CIMB AWSM Credit Card

      CIMB AWSM Card
      CIMB AWSM Card
      CIMB AWSM offers unlimited 1% cashback on dining, online shopping, telco and entertainment. Also, it's SimplyGo compatible and free for life.
      • Pros
        • Students, NSFs & low-income consumers earning less than S$30,000/year
        • People with high spend on dining, entertainment, online shopping & telco
        • Individuals interested in discounts & deals in Indonesia and Malaysia
        • Cons
          • Individuals who earn more than S$30,000/year
          • People who tend to eat in, and prefer to shop offline
          • Young adults looking for cashback on their utilities spend

          Read Also: Best Student Credit Cards.

          If you’re an avid traveler but want an entry level credit card, look no further than the Krisflyer UOB credit card. For a Singapore Airlines fan, this card is one of the best on the market to earn KrisFlyer miles with other significant perks. Another great option is the HSBC Revolution credit card for those that tend to spend more on shopping, dining, and entertainment.

          KrisFlyer UOB Credit Card

          Consider this if you're a budget traveler who prefers flying with SIA
          • Pros
            • 3 mi per S$1 on SIA, SilkAir, Scoot & KrisShop
            • Up to 3 mi on dining, transport, online shopping & travel
            • Expedited KF Elite Silver status, Scoot privileges
            • 10,000 annual bonus renewal miles
            • Cons
              • Just 1.2 mi on non-category overseas spend
              • No lounge access perks
              • No spend-based fee-waiver

              HSBC Revolution Credit Card

              Consider this if you spend mostly on shopping, dining and entertainment
              • Pros
                • Great rewards on local dining and entertainment
                • Online shopping perks
                • No-fee card
                • Cons
                  • Lacks rewards for frequent travellers who spend large amounts overseas
                  • Not suitable for low budgets

                  Read Also: The Best Credit Cards for Young Adults.

                  5. You Recently Applied for Many Credit Cards

                  picture of an open wallet on a table

                  Last but not least, another common reason why your credit card application could be rejected is if you have applied for other credit cards recently.

                  Essentially when you apply for a credit card, the bank will make a credit score inquiry to do their due diligence. However, everytime a bank makes a credit score inquiry, your credit score actually decreases. Imagine your boss’ boss randomly keeps checking in on your performance. Even if you are doing good work, your supervisor is bound to get suspicious.

                  Solution: Good news is that these drops in your credit score are really light, and your score can quickly recuperate quickly. In due time, you will be able to apply for a credit card and be successful.

                  In the meantime, you can consider applying for a debit card that offer your similar perks such as cashback and rebates. Our top picks would be the SAFRA DBS debit card and the UOB One card, for some of the best benefits.

                  SAFRA DBS Debit Card

                  SAFRA DBS Debit Card

                  Consider this if you want great cashback on all spend

                  UOB One Card

                  Consider this if you want to earn 5% rebate on all spend
                  • Pros
                    • Good fit for budgets of at least S$2,000 per month
                    • Easy cashback on daily spend
                    • Gives rebates for paying bills
                    • Cons
                      • Doesn't fit inconsistent budgets
                      • Annual fee

                      Read Also: The Best Debit Cards in Singapore.

                      Consequences of Getting Rejected

                      Will getting rejected now affect my chances of being successful in my future credit card application? This might be a major concern of yours but do not worry, there are no major consequences of getting rejected.

                      Due to the hard credit score inquiry your bank makes, your credit score may drop slightly in the short run, but is sure to bounce back in no time. Just make sure you give enough time between your applications for the credit score to organically increase.


                      picture of an american express business card with a padlock in front of it

                      All in all, there are many reasons why your credit card application might be denied. In this article we discussed the five most common reasons: reaching your credit limit, having low incomes, having high unpaid loans, having bad credit, or simply applying for too many credit cards. If you are unsure which exactly might be the main issue, contact your bank and they will be more than willing to provide you with further details.

                      As you build your credit score and wait for the next best application window, consider applying for debit cards such as the SAFRA DBS card that offers perks similar to that of a credit card. If credit score is your main issue, you can and should take active steps to improve these. In the meantime, consider applying for credit cards with low credit limits, or cards designed for young adults like the Maybank eVibes credit card.

                      Additional Resources

                      Fiona Ling

                      Fiona is a full-stack marketer working in the digital sphere for more than six years.
                      A self-proclaimed foodie and bargain hunter, she wants to bring the best deals and value to the community around the world. When not working on her pet projects, Fiona can be found sipping a coffee while reading a paperbacks or watching mystery thrillers on Netflix and Disney+.

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