Credit Rating Dropped 150 after Closing a Credit Card

peuwayaqdq on 12/03/2018 - 16:28

Hi all, I just learned that my credit rating (according to Credit Savvy) has dropped 150 points from 705 to 555. And the only reason for that is the closing of one of my credit cards for which I didn't want to continue because of the annual fee.

There are 2 recent activities reported on Credit Savvy which have variable impact on my credit rating:

  • Credit Accounts and Relationships which shows that I closed my credit card and says "You currently have no credit relationships as reported by specialty finance providers on your Experian credit file."
  • Repayment summary which says "Repayments reported as up to date"

I don't see any negative reports but nonetheless my credit rating has dropped. Is this normal? One thing that I can think of is that by closing my credit card it would change my credit utilization ratio because I lost that credit limit imposed to my closed card. But surely credit score is more complicated than that? The fact that I always pay my bill on time doesn't make any difference?

Financial

Comments

  • dcep on 12/03/2018 - 16:47

    who cares about credit rating here

  • JIMB0 on 12/03/2018 - 18:01

    according to Credit Savvy

    Doesn't necessarily mean anything. Banks will have their own rating system.

    • T-man on 12/03/2018 - 21:19

      Correct! My Credit Savvy is below average and ANZ invited me to increase the limit to 50k from 24,500 and I got an approval within 24h.

  • jimbobaus on 13/03/2018 - 03:55
    -1

    Credit scores are worthless in Australia
    the number is literally worthless.

    no lenders in Australia use credit scores
    they have their own systems and polices regarding who they will loan to and they structure their polices based on legislation.

  • peuwayaqdq on 13/03/2018 - 07:09

    Thanks guys. That's good to know. I guess it is better that financial institution (ie lender in terms of applying for mortgage) has their own process and policies in assessing an applicant instead of relying on "automated" numbers supplied by third party.

    This is the only thing that stops me from applying for new credit card when someone posted bonus points etc. Does it mean there is no downside at all to apply for new credit cards for the points when it is time for me to apply for mortgage? Sorry it is a bit digressing from the topic.

    • dcep on 13/03/2018 - 14:41

      credit limit on cc will impact your borrowing power (how much you can borrow) that's for sure

      you can cancel and wait till after settlement then only apply for CC

      • peuwayaqdq on 13/03/2018 - 18:38

        Yeah credit limit is easy to maintain because generally the reason for additional credit card is for the sign up bonus and will be cancelled afterwards anyway. But thanks for the info.

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