Do I Have The Rights to Know The Reason if a Bank Declines My Credit Card Application

Hi Guys,

I recently applied for a credit card from HSBC. they declined my application. I am a little disappointed, but the most frustrating part is that they refuse to tell me the reasons. I feel like I have the rights to know that, because shouldn't the process be transparent? Should I file a complaint to AFCA?

Would love to hear your thoughts.

Many thanks!


    • +1

      Yep, came to say this. But you’ve said it much better than I could have.

      Long story short: The people you’re asking don’t know, and that’s by design.

  • A recent change of address or job can be an automatic decline for some applications. Also multiple applications for credit over a period less than a year. It’s just part of the profiling. I change addresses regularly but keep my “credit” address the same as long as possible especially if I might need some finance for something coming up. A credit card is basically an unsecured loan, unlike a car for instance.Pro Tip: A simple mail redirection fixes the urgency around this.

  • Companies like youi do hard credit checks on quotes that affect your credit score. If you’ve recently shopped around for insurance, that could be your culprit.

    Get a hold of your credit file and look for anomalies.

  • I got rejected by HSBC too. Didn’t bother asking why as i got 1 approved by Citibank after that. I have a full time job and at the time I got no other credit card just 1 car loan from Essanda.

  • +1

    There's a lot of speculation here and ifs and buts. However here's the actual answer from ASIC
    TL;DR - Credit Providers only have to provide you with the reasons it WAS approved if they go ahead with you. If they don't go ahead with your application they do not need to disclose how or why they didn't.

    "Written assessment
    This is a preliminary or final written assessment that a credit contract or consumer lease is ‘not unsuitable’ for the consumer. You are required to give a free copy of the written assessment to the consumer if they ask you for one within seven years of entering into the credit contract (if you are a credit provider) or of the date of the quote (if you are a credit assistance provider).

    You are not required to give a written assessment to a consumer if the credit contract or consumer lease is not entered into or the credit limit is not increased (if you are a credit provider), or if you do not provide credit assistance (if you are a credit assistance provider)."

  • +1

    Watch the episode of the Simpsons where Homer attempts to get a second mortgage:

  • No of course not.

    They don't disclose the reasons so it's harder for people to game the system.

    • People game the system??? People are the worst!

  • No

  • I think that's a good thing. They don't want you in debt.

    Or apply other provider? CBA, AMEX? You can check your credit score to see if it is high enough.

  • Have you looked at getcreditscore ?
    The dashboard should give you not only your score but also positives and negatives and financial details that a bank sees. That should help a bit

  • Any existing credit cards, home/car/personal loans?
    PR or citizen?
    Any defaults in past on any debt?
    Any savings?

    • I don't borrow money to buy things except my house which has been paid off. Never had default, no debt, no loans, never pay interest on credit cards always pay before due date( I actually missed due date a few times by accident, called bank and most of times they would refund the interest charges). And yes I got Oz citizenship 20+ years ago.

      • You are too good for the banks it seems and they won't make money off you. Thats probably why you are rejected. Read in a different credit card deal about another bloke who called up bank asking same reason and after too much back n fro they admitted the applicant was too good.

        • but I do use my credit cards (I have two btw) a lot, banks should charge merchant fees, I guess.

  • I'm usually declined 2 times before getting accepted… for credit card churn deals at least!

    My finances are quite complex and it's often too much effort for the idiot on the other side of the screen to process, so I get auto declined. There are ways to appeal and be assertive that you are good for the credit… but it means a lot of time on hold and VERY details but easy to understand emails.

  • +1

    This is why DeFi on the block chain will prevail. It is transparent and you will get credit as long as you fulfil the smart contracts criteria. Cut the middleman of banks DeFi will prevail.

    • +1

      What is the smart contracts criteria?

      • It will be the same ones that the bank uses. Only difference is that it will be fully transparent. So the user will know why they got rejected.

        • It will be the same ones that the bank uses.

          How do you know that if the bank's criteria is not transparent?

          I want to know what the criteria DeFi uses so I don't get declined.

  • +1

    Please don't bog down AFCA by filing a complaint, as others mentioned banks don't have to tell you why and they generally don't, both to avoid disclosing their credit methodology and to avoid argument/litigation about the reason.

    It's similar to how prospective employers don't give a reason when they reject your job application, the last thing they want is a lawsuit challenging the reason of the refusal.

  • +7

    Used to work in credit risk (not specifically credit assessment for cards, but I know the process).

    Your application is not "hand reviewed" like an exam paper where there are certain questions and you get them right and wrong, therefore, you can't get the sort of feedback that you're after because it doesn't exist.

    Basically all of your details are fed into an algorithm that will calculate various things and takes into account a whole host of variables such as the bank's current risk position, the current economic outlook and many other factors which are completely out of your control.

    The credit pipeline is such that the front-line credit assessor is usually a very junior person. Their job is simply to look over the materials you've provided and enter your details into the system in a way that the system can understand. They are not an executive who decides on whether you can get the card or not.

    If you look at one of the big 4 banks, the credit teams are huge, with over $100M worth of employees who do everything from front line credit assessment (which is really just data entry with some judgement), to first, second, and third line risk teams who do complex mathematical modelling of the risk position for the product you're applying for, for the category of product, and also for the bank's entire position.

    The "human involvement" in the credit process varies. For something like a credit card, there is almost no involvement at all, which is why nobody can tell you anything. For something like a home loan, there is a bit more involvement (e.g. someone is assigned to you to make sure information you submit is correct, to help you get things together, to try and help you fix this or that to get approved…etc.). For something like a business loan, you might have a relationship manager who can help you with the process. For institutional clients, you will usually have an entire team of bankers and friends who service you…etc.

    Basically the product you are applying for is bottom of the barrel, mass market (i.e. credit cards). There is nobody at the bank who is responsible for acceptance/rejection. It's not an "executive" decision where someone looks at your application and has a think about it.

    Advice - move on, apply somewhere else.

  • No.

  • Similar experience for me in February. My hunch was that they were lax in their T&Cs wording which potentially exposed them to too many applicants so they cherry picked.

    Interestingly, HSBC refused to delete the data farmed for the application even though it was unsuccessful (and confirmed they do keep the information) … as any applicant knows there was a buttload of sensitive information there.

    • HSBC is a no-no for me now. am I able to request to have my data deleted?

      • I told them to delete the application information when I challenged them on the basis for declining, but they said as per their terms they retain this information…if you try and get a different response I would be very interested to know!

      • No. They will keep your data on file. Banks will keep all application data as it helps to refine their credit models

  • Didn't know applying cc can be so troublesome, all my cc application was done online and pretty straightforward, maybe I have excellent c rating.

    • or they just like you, could be your name… hahaha just kidding

  • +1

    Comments above have explained the algorithm used but I know that doesn't give you the "why" in your particular circumstance. One factor that might be in play could be your line of work - since Covid, a lot of institutions are wary of some particular occupations. QBE for instance, so I have been told, has no appetite currently for gym employees or owners and won't accept mortgage insurance proposals for people in that industry. Apparently it's deemed too risky at present. Airline employees, people in the travel or tourism industry are all considered high risk at a lot of banks right now.

    • +1

      maybe their model shows I am about to lose my job? or maybe the person who handles my application is my boss' gf? OMG

  • -1

    The reason is you are not credit worthy.

  • +2

    Lol sounds like you are asking your ex why they dumped you.

  • Are you entitled to an explanation, absolutely not.

    Depending on the model used it might not be even possible.
    Eg; if a blackbox ML model is being used its simple as 'computer says no'.

    Whilst even if it's a regression model the scoring attributes will be tightly held information.

    Different industry, however for the models we implemented only a small number of employees in the credit team actually would know the scored attributes.
    We wouldn't share that knowledge even internally.

    Generally speaking you will have similar attributes to a cohort that contains a probability of default that is higher than the risk appetite.

    Doesn't mean you will default, just that within a cohort with similar attributes the number that will statistically default is too high.

    Eg: the good bad odds scored may be 10:1 whilst the risk appetite will only approve 15:1 or higher.

  • +1

    Because you are too poor

  • -2

    Probably not. Just be grateful you were able to dodge being in debt.

    I guess a question for you would be: Why would you need a DEBT card?

  • I got declined too from HSBC lol, not sure why but thats the first time ever declined

    • What is your salary?

      I'm looking to apply too but I already applied for the ANZ one a few months back for the e-gift card. So if its a pain in the ass to sign to HSBC then I'm not going to bother

      • In the 6 figures so it was a surprise that I got declined tbh. First time ever being declined and my credit score is high. Maybe HSBC is just really strict so maybe dont waste your time on it.

        • oh wow, I was expecting you to say minimum wage around $50k p/a

          Really weird that you got declined? Do you have mortgage?

          • @Homr: yes I have a Mortgage which only deducts about 20% of my monthly income.

    • Also got declined from HSBC not sure how their system works, but I've got a clean credit history and also make over six figures. Applied to every other bank without a problem.

  • What is your salary?

  • Like others have said, they are under no obligation to tell you under the present credit rules. You can request a copy of your application and the information you have provided, but they don't have to advise you what factor lead to the decline.

    Unfortunately, from speaking to compliance officers in banks a lot of this comes down to the threat of negative press surrounding discrimination. Some banks / finance companies will build postcodes into their assessment algorithms which could be considered discriminatory.

  • They must have found out you are an OzBargain card churner - like many others on here.

  • +1

    Grab a free copy of your credit file and it might be self explanatory.

    But from my professional experience, an unexplained declined has a good chance meaning its a positive fraud match or equivalent/ similar and they wish to have nothing to do with the applicant.

  • +3

    My bank of years declined a $2k credit card with a 6 figure income, wouldnt tell me why. Applied with a bank id never used before and got approved. So moved everything i had away from bank 1 to bank 2. Vote with your feet.

  • Wanted some Qantas points so in a Westpac credit card application, it said " minimum salary $30k" so long as meet the minimum requirement what does it matter so I wrote salary $30K. They phoned my boss to verify employment who then told them my actual salary which was much much higher than $30K, they declined to offer me a card probably because I wasn't truthful in my application.

  • No

  • -1

    Here are a few relevant anecdotes:
    1/ my company uses an offshore data entry team. I think their error rate is about 10%. I wouldn't trust them but they sure are cheap.
    2/ mate of mine was furloughed during covid and cancelled his credit card on a whim. He's working now and wanted to apply again. He got declined. He has since applied to get $150k to do a house reno with the same finance company and has had no problems. They won't let him have $5k but will let him have $150k…
    3/ I've only been declined from a credit card once, with St George. At the time I had no debt (I did have access to a margin lending facility), above average salary ($100k), worked in IT in the finance industry, high disposable income, significant liquid assets ($100k in cash and shares). I couldn't get the reason either.

  • -2

    Absolutely you have the right. Those suggesting that it will lead people to lying on the application to get cards in the future; well that's fraud and what's stopping someone lying on the application in the first place? If it were me, I would black list HSBC and refuse to use their services, ever.

    • -1

      Absolutely you have the right

      Do you have source for this?

      Yeh, no one ever puts their expenses lower than what it really is. Why do lenders even bother asking for payslips, proof of income/employment and bank statements? They should take our word for it cause everyone is 100% honest.

  • Use afterpay then no worries mate

  • I remember I got rejected for an ANZ credit card several years ago. I was so confused. I thought of giving them a call to ask why and possibly review my application - it got reviewed and voila… they overturned the decision and it was approved.

    They couldn’t tell me the reason why but the service representative said my application was fine.

  • Simple. It's an ALGORITHM. The phone monkeys don't know the exact reason. Humans don't review the application, they merely verify a few aspects. On rare occasions you may be able to overturn if you convince them to get it reviewed by someone.

  • +2

    I understand some people are trying to help, but there's some really bad speculation in the comment section. I work in credit within business lending but have dealt with consumer lending in the past (home loans and asset finance). The principles of credit is similar throughout the different lending thresholds, various levels of security and types of security. I was never in the credit cards team so I do not understand the full process but have spoken to people who worked there once upon a time.

    Banks use a scorecard system that takes in what you've inputted and spits out a decision after comparing that input to the various thresholds set by the people in risk team. They can verify income/ what you declare vs what's in your comprehensive credit report. Every bank is different in appetite, and for assessment of credit cards, it is largely automated by the scorecard system (bottom of the credit pyramid). Sure, some payslips are challenging to read for inexperienced assessors especially those overseas who are not too familiar however the banks do train them and they have a standardised way of calculating your income and determine which parts of your income is ongoing vs non-ongoing (more complex income documents will lose a bit of income in these types of standardised assessments however the bank deems it an acceptable commercial risk). Also be mindful of COVID, most if not all banks have a change in appetite and they introduced a 'COVID' overlay on top of the standard scorecard. This means shading of income (taking a certain % of actual income), and in other cases, restricting certain types of income from COVID impacted industries and increasing certain requirements (e.g. margin of serviceability, stability of income tenure, existing customer with existing lending, stability of residence, net worth, etc).

    Some general reasons for decline in the credit card space may be:
    - Lack of serviceability (reminder that liabilities are based on limits not current balance)
    - Not truthful
    - Instability of residence
    - Instability of employment type
    - Instability of employment tenure
    - Previous defaults/ adverse credit history
    - Too many credit enquiries over a period of time/ recent time
    - Payday lender enquiries
    - Low credit score
    - Net worth
    - Your conduct in your accounts
    - Fraud or misrepresentation. The banks cannot tip anyone off - be it the borrower or its agents. This is one of the reasons why the banks can decline applications without explanation.

    The banks do not
    - Discriminate on types of names, gender
    - Decline you because you pay the balance off every month. They make money off merchants whenever you use your credit card.
    - Decline you because you don't use your credit card much

    Also an FYI for general readers
    - Customer service and their managers won't be able to help you because this is higher than their paygrade. Plus, you won't ever have access to the risk team or the assessment team.
    - Understand what your rights are. Read the legislation. AFCA is based on legislation and they are objective.
    - Asking to remove credit enquiry because you are declined is not an acceptable reason

    I'm sure I've missed something that others in the actual credit card space can assist. Hope this comment is educational for those interested. As always (from me or anyone in forums), none of this is financial or legal advice.

  • -2

    Most of the replies here are absolutely useless, and false.

    I was a personal lender for years and there is no way to 'game' the system.

    Your assets and liabilities are all there for the bank to see, as are all of your credit enquiries.

    There are also responsible lending laws that are abided by, so your lenders will always do their due diligence. If you as the customer are hiding anything that's not declared and has an impact on your application that's on you, but you are signing your legal declaration on the app.

    Working for a bank and credit union, we were always happy to advise the reason for any declined application and there was never any directive to do otherwise.

    In terms of why the application was declined, it could depend on how it was assessed. Automatic assessing systems look at various factors, such as the amount of money going in versus going out of your accounts and if it hits nil after every pay.

    Other things such as automatic triggers for gambling, the systems detect debits to gambling apps/accounts and even see Lotto transactions as gambling. I'm not sure of the amount of triggers there to auto decline but when assessing manually, we will scour through such transactions and have a duty to verbally ask you about them.

    Other things such as transfers or debits to loan accounts that have not been declared and do not show on your credit check, usually flag as well. Which could be helping out an ex, family member or similar.

    Again, no idea why the bank would refuse but you didn't deserve a lot of the baseless replies here OP.

  • Two things that would have contributed.

    1. Current credit cards. They assume the max of the limit regardless of your balance. It’s a risk assessment to determine if all your assets and liabilities are positive/negative when calculated.

    2. Banking history with HSBC. Unless you already opened a transaction/savings account, they have no additional information apart from your credit history with other credit providers and income (through payslips and other institutional transaction/savings accounts).

    Similar to what the community have already said, you’re not entitled to reasons for a rejection outside of what may be obvious on a credit report. That said, you can speak to a service representative and ask when it might be appropriate to apply again and (with enough charm) ask what may have contributed to the hard decline.

  • Of course it would be very helpful to know in order to improve your credit situation.

    However people have used this information against the credit provider in the past so now they just don't give any reasons.
    So the credit provider is just protecting their right to refuse an application.

    One could however try asking what would improve the strength of their application.

Login or Join to leave a comment