When you file an application for a credit card, let alone any financial product or service, the bank you are applying with can take into account almost fifty different factors.
These factors determine whether or not your bank believes you are trustworthy enough to lend a credit card to.
Is the application criteria the same across Australian banks?
No – each financial provider will have their own scoring card which they will use to rate your ‘credit-worthiness’. Even within the same bank, you may be approved for one credit card but declined for another.
Different credit cards have different approval criteria – a Gold credit card may have an earnings requirement of $40,000, where as a standard low rate card may only have a requirement of $20,000.
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- Information on your current relationship with a credit provider
What are the most common requirements for credit card application approval?
As mentioned previously, there are countless factors that are taken into account when assessing your credit-worthiness. However, the bank will filter out the high-level requirements up front. These include:
- Age: You need to be at least 18 year of age for a credit card. This is the minimum across every single financial provider across the nation.
- Earnings Requirement: This could be as low as a Centrelink income for student credit cards, or up to $70,000 and over for a platinum credit card.
- State of Residency: Being a permanent Australian resident is imperative. If you are not a permanent citizen, you may be subject to stricter criteria elsewhere, or simply declined on the basis of your residency.
- Credit Rating: This is particularly important in the current economic climate as banks are becoming increasingly hesitant to lend to risky prospects. Find out more about your credit rating and credit file here.
What are the most common potential reasons my credit card application could be declined ?
#1 – A Previously Declined Application for Credit
Banks can save themselves time and resources by automatically declining an applicant who has been recently declined from a different application for credit. It doesn’t necessarily have to be with the same institution either – banks have access to your credit file which lists all your financial products, when you applied for them, and whether you were approved or not.
It is a general rule of thumb not to apply for credit within a 2 week span of being declined for a different credit application. However, you may want to consider taking an even longer gap – certain institutions apply a 3 month ‘cooling off’ period of credit rejection.
#2 – Incorrect Information & ‘Adverse Bureau’
A lot of your financial history is more public than you may think. Banks and interested in analyzing your financial history have the right to do so. Thus, providing incorrect information can deem you as untrustworthy and ultimately inadequate for credit card approval.
Adverse Bureau means your lender does not believe that the judgements and other factors are represented adequately in their scorecards, generally because the numbers were too small for their risk to be adequately represented.
#3 – Self Employed or Casual Employment
There’s nothing wrong with self employment or casual employment – however in the short term, either form can be risky and insecure. Many banks will prefer to lend to a self employed or casual applicant if they have been employed for a certain period of time. This can vary from 6 months to over 2 years.
#4 – No Documents Provided
In most cases, the financial institution you’ve applied with will have enough access to your information and financial history to determine your credit-worthiness. Sometimes this won’t be enough, and you will need to send in documented proof of what they require of you. This is most commonly a bank statement demonstrating your income.
Whether it’s laziness or forgetfulness, many applicants apparently bail on this step of their credit card approval which ultimately leads to a decline.
#5 – Poor Relationship with Bank
If you and the bank you’re applying with have had disputes in the past, this may very well affect the outcome. Consumer loyalty is slowly being phased out in importance in recent years, but remains a determining factor.
Which bank has an easy application process?
Feel free to contact firstname.lastname@example.org if you have a question or query and we will do our best to lend a hand.