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 ways. Unfortunately, not everyone can get credit cards for low income earners. So today we will know why will banks not give you a credit card?
Problems with credit history
Problems should be understood as tainted credit history. This is the most common reason why banks deny loans. Credit history is a detailed dossier of the borrower, which keeps the information about his payment discipline: the loans he took before in banks and financial companies, with a record of the amounts, dates of all payments, and delinquencies if any. Banks send this data to credit bureaus, which collect it.
Before a bank gives a client a loan, they assess 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 what exactly is wrong with it.
Errors in credit history. Why they appear and how to correct them.
If the bank does not like something in it, but you know that all your loans were closed on time, then it is likely that there is a mistake. Here’s an easy one. Check your history, find the error, and file a false report. You can use it to contact either the bureau or the specific bank which sent incorrect information about you.
It is much more complicated if the borrower’s fault corrupts the history. Only a good record can correct a bad one. It will not be easy to get it, but it is possible. You will have to take new loans and pay them back in time. Online-loan companies can help, as they do not have such strict requirements for borrowers.
The age of the borrower
Each bank has its own rules. Some lend from the age of 18. Others need to be at least 21 years old, and others need to be 23 and older. The same applies to the age limit. In some banks, it is 60. In others – 65, 70 years old. If the bank’s understanding of the client does not fit the age, he will be rejected.
What to do: find a bank that is more loyal to young or elderly borrowers. If you are denied a loan at one bank, go to the next. You can apply for an online loan from microfinance companies that work with credit bureaus as a last resort. They’re usually not as mushy as banks. In addition, some give the first loan almost for free (at 0.01%). So you can start a good credit history and count on the goodwill of other lenders in the future.
No income certificate
Many banks require a potential client to produce an income certificate from his workplace. This statement assumes that the person is officially employed, and not everybody has an official job. Today a lot of people get paid in an envelope. In some banks, such clients will be denied credit.
What to do: try to convince the bank of your solvency. Banks are adapting to the reality in which they have to work. They are aware that there are many solvent clients among the people who can’t provide a certificate of income. And many are willing to work with them.
The main thing is not to deceive the bank by drawing fake certificates. His security service will detect a phony diploma, and you will be put on the “blocklist” of fraudsters. Then you can forget about loans in this and other institutions.
Lack of registration (residence permit)
This can also be a good reason for refusing a loan for many banks.
What to do: show documents confirming your solvency or take an online loan. The absence of a residence permit can be smoothed by documents confirming your solvency: the 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 an online loan from a microfinance company. For them, the lack of residence registration is not an argument for not giving a loan. The high-interest rates at which they issue their loans more than compensate for the risks of non-payment. That is why they are willing to forgive borrowers for not having a certificate of income or registration.
Mistakes and inaccuracies in filling out the form
Don’t worry; the bank will carefully check everything you have told them about yourself. Any mistake or inaccuracy in completing the form can lead to the rejection of the loan. For example, if you mistake one digit in the telephone number at home, you can inadvertently specify the number, which appears as an office number in the bank’s database. The mistake in the series or number of your passport can lead to you indicating an invalid or lost document, and you can be considered a fraud. If you put a wrong or invalid phone number of someone you know or a relative in the application form, the same will happen.
What to do:
- Carefully check everything you put in the application.
- Only give accurate information.
- Warn 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, try to find out the exact reason from the bank manager. There is a slight chance that you will be told it. And If you do not know the reason, it makes sense to go through these items in detail. More often than not, the reason lies in one of them.
Before taking a new loan, it is worth:
- Check your credit history;
- Fill out a credit application carefully, indicating only valid data;
- To warn your relatives, whose phone numbers you indicated in the application form, that the bank might call them.
You can probably get a credit card if you have a low income. The main thing is to check the form and the accuracy of the data carefully.