Why Your Credit Card Application Was Rejected in Malaysia: Common Reasons and Solutions

Applying for a credit card can be an important finance management step - whether to build your credit, gain rewards or for simply increased convenience in how you make purchases. But receiving the rejection letter can be devastating. If you’re asking “Why was my credit card application rejected?” - knowing the reasons why you were rejected is vital for improving your success next time. In this article, we’ll look at some common reasons for credit card rejections in Malaysia and how to improve your chances next time.

Common Reasons for Credit Card Application Rejection

Insufficient Income or Employment History

One of the most common reasons a credit card application is denied is not enough income or unstable employment. Credit card companies want assurance that you have stable income to pay them back for any credit you use.

Example: You're applying for a credit card with an income requirement higher than what you’re spending on your bills every month - my friend wanted to apply for this credit card, but he said his annual income was lower than the number on the card that required a minimum annual income of $24K. If his salary is lower than what the bank EXPECTS, they simply will not consider him for approval.

Your job history. Credit card companies like to see a long history of employment with the same company—preferably more than a year—to show stability. If you just started a new job, or are employed in a short-term or contract position, the bank may see you as a risk.

High Debt-to-Income Ratio

Debt-to-income ratio (DTI): DTI is the percentage of your income that goes toward paying off debt. This figure shows lenders how much of your income is committed to existing obligations and gives an idea of your ability to take on more credit.

In Malaysia, the perfect DTI to ensure your credit card application is approved successfully is below 70% for those who earn RM3,000 a month and above. If your DTI is too high it indicates to the bank that you cannot spare more cash to repay further loans, which is the reason why your credit card application may be rejected.

Example: If you have multiple loans, such as a home loan and a car loan, and your monthly debt obligations take up a large part of your income, you could be denied a new credit card if your DTI is too high.

Poor Credit History or CTOS/CCRIS Records

Your credit history is vital to the card issuer’s decision to approve (or decline) your application. Banks assess your credit report via CTOS (Centralized Trading Online System) and CCRIS (Central Credit Reference Information System) in Malaysia. Late payments, defaults, and other black marks can lead to your application being declined.

Example: You may have missed a few loan repayments, or even defaulted on a personal loan. Those negative entries will end up on your CTOS or CCRIS report, and could result in your application being rejected on credit card approval.

Incomplete or Incorrect Application

Sometimes, the simplest of mistakes – like not filling in something you should have, mistaking the bank’s requirements and saying you’re a professional when you’re actually a contractor, or forgetting to attach other documents – can result in a rejected application. Be sure to be complete. Example: You applied for a card online and forgot to attach your latest income statement or your IC. If the bank’s system catches this during the approval process, it can just reject your application until you go back and complete it.

How Your Credit Score Affects Your Application

Your credit score is a numerical representation of this idea, referring specifically to your risk level as indicated by your record in CTOS/CCRIS and other similar systems. If you’re a standup guy who pays his debts on time, then you’re low risk and stand to benefit from the incentives given for being someone who’s on top of his finances.

A higher credit score improves your odds of approval; a score lower than that could mean rejection. If your credit score is 650 or less, a lender may see you as a higher risk borrower. Tip: Routinely look over your credit score and report so you can catch and correct errors, or outdated bad information, before lenders see them and judge your credit worthiness on that.

Solutions to Boost Your Chances of Getting Approved

Don’t be disheartened by rejection. There are ways to improve your chances of being approved for a credit card in the future. Here’s how: Check and Fix Your Credit Score Before applying for another credit card consider checking your CTOS and CCRIS report. If there’re mistakes or dead listings, correct these by disputing them with the appropriate agency.

Tips to Improve Credit Score:

• Pay off overdue bills: Bills that you haven’t paid must be paid.
• Regularly pay all bills on time: The more responsible you are, the more creditworthy you appear.
• Pay down existing credit cards: If you have existing credit cards, try to keep your balance under 30 percent of your available credit.

Pay Down Existing Debt and Make Financial Sacrifices

One reason why you may get turned down for credit cards one after the other is that your ratio of debt to income is too high.

• Pay off debt: If you have a few loans already, pay them off before you try to get another card.
• Consider a debt consolidation loan: If you are struggling under more than one loan, try to consolidate them into one that ideally has a lower rate of interest. This will make paying off your debt more straightforward.

If you are looking for a quick way to get your debts under control, you might consider an instant cash loan to pay off your debts. However, make sure you use this wisely so that you don’t add more to your burden.

Wait Before Reapplying

If your credit card application has been denied, you will want to hold off before reapplying. Trying again too soon can cause you to seem like a shaky borrower, which could further harm your credit score. Instead, wait at least 3 to 6 months to reap the benefits of improving your score, taking down your debt and cleaning up your finances.

Example: A rejected application can sometimes be a blessing in disguise. Improve your credit report, dig a bit deeper into your debt, and collect a few payslips before reapplying.

If your application has been turned down, you might be wondering when it’s okay to try again. Getting rejected is tough, but the main thing is to make sure your financial situation is in a much better place first. As a general rule of thumb, it’s time to reapply if you’ve worked on…

• Better credit score: Your odds of being approved increase after you’ve paid off your debts and fixed your report.
• Less debt: If your DTI is below 70% (or 60% for lower earners), your odds of being approved increase.
• Stabilized income: Make sure you have been employed a reasonable amount of time, at least six months, to show stability.

While you’re waiting to get approved, consider applying for an instant cash loan so you have cash available to meet your needs.

Credit Card Application Requirements

Conclusion

Knowing why a credit card application was denied is only the first step in improving your chances of approval next time. Whether that means improving a low credit score, working on debt, or simply ensuring you’re filling out the applications properly, these pointers can guide you in the right direction. And remember, patience is key. If you’re not approved on your first try don’t be discouraged! Take the time to improve your credit and apply when you’re stronger.

If you’re in immediate need of money and want to better your situation, then an instant cash loan might be right for you. If you take the steps above and actively work on your finances both before and after, you may win that credit card you desire in the near future.

FAQ

How can I improve my chances of getting my credit card approved?

How can you improve your chances of getting approved for a credit card? Increasing your chances depends on meeting the eligibility requirements such as income and employment status. You can also make sure your record is in order -what is your credit score? See if you can pay down your debt and submit an accurate and thorough application.

What is the minimum income to apply for a credit card in Malaysia?

Generally, if you are a first time applicant, you need to earn a minimum of RM24,000 per annum. Of course, this number changes depending on the card you are applying for.

Can I apply for a card with a lot of loans?

You can. Just keep in mind how this will affect your DTI. For the smoothest experience, get your DTI down to below 70%.

What documents do I need when applying for a credit card?

You generally need your IC, your income (for example, salary slips or bank statements), and in some cases your EPF statement.