Credit cards can be really helpful to manage working capital. But, I have noticed that banks deny the credit cards to self-employed business owners or professionals.

Why banks whether smaller or bigger do not give credit cards to professionals?

Another thing is that most of the salaried employee have credit cards and banks happily give cards to them.

For instance if a self-employed person earns even double the salary or an employee, he is denied card whereas salaried person is provided with card.

Why banks without even reason the cards, although they promise pre approved cards.

In my case I got a call from State Bank of India (SBI) that my card was pre approved and just need to submit documents for getting the credit card, however I got a message after a month that my card was rejected.

Why do banks reject the credit cards and on first place why do they collect documents, if card was to be rejected?

Why applicant is not given back his documents upon rejection of card? What banks do with these documents and how to ensure that these documents are not mishandled by banks?

Posted 2 years, 7 months ago by Rahul Rai


I don't have any credit card, loan or other liability from any bank or financial institute. I applied many times for credit card but got rejected due to one and only one reason.

Not enough CIBIL score.

I never understood how to increase CIBIL score without taking any loan or credit card!!! It looks like a loop. You need CIBIL score for a card and you need a credit card for CIBIL score.

Yes, I pay more tax than many who holds cards.

No wonder, scams happen due to these kind of policies of bank.

Posted 2 years, 7 months ago by CA Pulkit Sharma


Before coming to any conclusion, lets discuss the factors based on which Banks or financial institution gives any loan, credit card or other credit facilities.

Bank normally consider these factors before issuing any credit facilities:

  1. CIBIL score
  2. Credit worthiness of applicant
  3. Annual Income of applicant
  4. Source of Income
  5. Repayment capability of applicant
  6. Identity records to avoid any fraud

CIBIL Score: Cibil score is nothing but you credit score. CIBIL is just a credit bureau agency that provides credit score. There are many agencies that provides credit score of an applicant based on his past experience with borrowings.

These agencies gives points for each credit transaction, Banks before processing application check the score.

What is credit score, why it matters and how you can improve your credit score?

Credit Score is quantum of your credit behavior over the time. It is a score indicating credit worthiness and past experience of financial institutes with applicant.

Your credit score will speak a true picture of how you managed your credit facilities in past.

Credit score matters because, financial institutes such as Banks, NBFCs consider this before processing any application. Credit score also speaks your repayment behavior and helps banks reduce their credit risk.

The factors that may affect your credit score are:

  1. Your payment history
  2. Utilization of credit facility
  3. Age of credit history
  4. Total credit accounts with all financial institutions

These are some of the factors among many other factors that can affect your credit score. Each credit bureau has their own style and formula to calculate your credit score.

I have never taken any credit facility including credit card, personal loan, housing loan from any bank. How do I increase my credit or CIBIL score?

This is a common problem every self employed applicant face. I did not get credit card because I had no credit history and was not making crores.

My application got rejected every time I applied for a credit card or personal loan.

The trick I used to build a credit score and get credit card was suggested by a Bank Manager. Thank to him, now I have a credit score of 803, though its not from CIBIL but from another reputed agency experian.

Here is what I did to improve my credit score, actually I did not improve but it was a fresh start.

I have a saving bank account with State Bank of India (SBI), I made a Fixed Deposit (FD) and took OD (Over Draft) loan against this.

I utilized this OD account for a very minimum amount, thus saving interest. After a six month period, I got my credit score and got a credit card too.

If you never had a loan, you can use this method to build a credit score.

Credit worthiness of applicant for Credit card or loans from Banks or financial institutions.

After your credit score, banks will look for credit worthiness. Credit worthiness is nothing but checking whether credit facility can be given without affecting the risk of defaulting.

In simple terms, it checking your financial position.

Its said that, Banks give money to those who do not need and reject those who really need.

This is the reason that many those who are in need never get loans from banks. Documents are tempered to get false loans.

Your credit worthiness is calculated by evaluating your:

  1. Annual Income and source of Income,
  2. Your personal net worth,
  3. Net worth of your business,
  4. Your personal and family expenses,
  5. Your savings,
  6. Average balance in your bank accounts etc.

Annual Income of applicant matters in deciding loan approvals

Yes, annual income does matter. For instance, if your annual income is 5 Lakh and your expenses are 3 lakhs. You will have only 2 lakhs to repay loans.

Bank will not give you any loan where EMI is more than 2 lakhs for a year.

Source of Income also matters, banks normally do not consider one time income. You have more chances of getting credit facility if you are getting regular income, as a salary or business profits.

Repayment capability of applicant is considered only for the credit limit. As explained above, bank decide on amount of loan or credit facility based on your repayment capacity.

Repayment capacity can be traced from your ITR (Income Tax Returns).

Banks rejects loan or credit facility proposals if they find any defect in documents or applicant.

I have tried to explain every possible reason for which bank could have rejected your application for credit card. Based on the above explanation, I can say that you application might have been rejected due to:

  1. Low credit score,
  2. Bad credit history,
  3. Defect in documents,
  4. Low income,
  5. Any other reason.

If its any other reason for rejection, please share with others on this forum to increase knowledge on this topic.

Posted 2 years, 7 months ago by Stock Guru


Hi Sir, aken credit card Based on fixed deposit by SBI which I closed on Jan 2017. As per Paise bazar by Credit score they showing is 867 out of 900, when I apply through online all Bank are rejecting my application, Is there any Chance to get Credit card ?

Posted 2 years, 7 months ago by Raj Kumar Jalem


I got a credit card from SBI. Earlier even my application were getting rejected. I will advice you to open overdraft against your FD and use it for 6 months. After that apply for card and you will get it.

Even earlier I had a pre approved card from SBI, but it was rejected as I did not maintain 30,000 Rs. balance in my saving account. I used to make FD for whatever balance I had in SB account.

Posted 2 years, 7 months ago by CA Pulkit Sharma


Thank you very Much Sir,

Posted 2 years, 6 months ago by Raj Kumar Jalem


Raj Kumar Jalem follow and try what CA Pulkit said and let us know whether banks are giving you card or not.

What is your credit score?

You mentioned you had a card against FD, did you default any payment?

Posted 2 years, 6 months ago by Stock Guru


I discussed with banks, credit score is the main factor now. Due to demonetization banks have huge cash with them and they are giving loans and credit cards to everyone with a good credit score.

I think Stock Guru should come up with one more post on How to improve your credit score?

Posted 2 years, 6 months ago by Rahul Rai


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