Credit Card for Starters to Build Credit

sub102 on 12/08/2020 - 02:41

Hi guys,

I'm kinda new to Australia having been in the US for a while and wanting to know whether there is something like a credit background you can build which is the case there aka credit history. If so how to get started? I know getting a credit card early adds to the age of credit so I've been looking at some options, ideally a no annual fee rewards card. How hard is it to get the first card? Applied for the Kogan black friday deal credit card but got rejected although I have plenty of credit cards from the US and an excellent credit history. Will I be able to use that for my advantage or what do they check for?

Cheers!

Financial Credit Card

Comments

  • morse on 12/08/2020 - 03:45
    +1

    I thought they mostly look at your level of income, security of employment and any other debts. I could be completely wrong so will be interested in what others say, but I thought the more credit cards you have the less likely you are to get approved for another, or another loan. I have heard of people getting credit cards to build up a good credit history though.

    My personal experience is that I got a credit card very young, just for the points deals and kept forgetting to pay it, so I stopped having a credit card for many years and now let my husband be responsible for any credit cards in my name that we get for points etc. My poor history of paying the original card didn’t get in the way of being approved for subsequent cards or a mortgage, which I attribute to a decent income and secure employment. My husband has been rejected once when he had too many credit cards on the go (for the bonus points deals).

    • sub102 on 15/08/2020 - 17:20

      Thanks for the input, that seems quite different than the US where a credit card counts as kind of a loan where if you been paying it off in time its good for you being financially responsible. That's why I'm trying on credit cards and applied for an american express card but got rejected again even though I included a high level of income. They didn't even want proof of anything so I guess what they look for is some kind of a credit history in Australia

  • voiletmay on 12/08/2020 - 06:16
    +7

    My 22 year old daughter recently got a house loan and was told that because she never had a credit card or ever used afterpay it was a huge advantage. She was told she would have never got a loan if she had a credit card debt or afterpay debt.

    • Donaldhump on 12/08/2020 - 08:45
      +1

      Conversely my wife owns outright half a house in Sydney worth quite a bit, and various other assets, but has no credit card, and couldn’t get a phone plan from Vodafone due to no cr dit history.

    • JoeQuimby23 on 12/08/2020 - 10:38

      I was approved for a house loan mid last year. Had an Afterpay and a Zippay account in my name but nothing owing in either. I had to close both of them and supply a stat. dec. advising I'd done so in order for them to finalise the loan

    • Ughhh on 12/08/2020 - 13:00
      +3

      had a credit card debt

      Having a credit card won't automatically disqualify you from getting a home loan, as long as its clean and debt free. Thought may make the process a little faster and easier as you won't be forced to cancel the card and provide proof of cancellation.

    • sub102 on 15/08/2020 - 17:23

      Right a credit card debt and having a credit card should be hugely different things I guess. But even for that to be checked and for them to know is there any record of all those that is kept? and where and how would that be

  • popsiee on 12/08/2020 - 06:41
    -4

    Google : build credit score

    US history irrelevant and obviously your score is currently not at a good level to get rejected .

  • friedsnowdays on 12/08/2020 - 07:43
    +10

    The US system of credit scoring is very different to Australia (although we seem to be moving that way slowly).

    You don't need to get a credit card here to try and "build credit" in Australia, at least not in a way that really matters for now.

    The things that really count towards helping you get loans/ credit in the future are:
    -Reliable income (preferably full-time job)
    -History of employment
    -Citizenship and/ or Permanent Residency
    -Savings
    -No negative payment history
    -Low level of debt relative to your income
    -No use of payday lenders

    Given you are from the US, assuming you are on some kind of working visa, you may find yourself knocked back from a number of lenders due to their lending policy rules (i.e. an instant-decline without consideration of your "score" or credit-worthiness). As such you may want to do research to find lenders that lend to visa holders. Without residency it's very risky to give unsecured debt to a temporary resident as they can just leave the country.

    Otherwise if you want to create a credit file here it's as easy as paying utility bills or a phone bill.

    This is a government run website that has a lot of information on finance/banking in Australia.
    https://moneysmart.gov.au/managing-debt/credit-scores-and-cr…

    • jimbobaus on 12/08/2020 - 12:53
      -1

      Biggest difference is your credit “score” in Australia is a made up number generated by credit reporting companies so they can on sell your info to finance and loan companies and get a kick back when you apply for finance.

    • sub102 on 15/08/2020 - 17:34

      Very true what you say about temporary visa holders, thanks for the info. Anyway where and how all that history here get recorded? For example when you say utiyilty bill or phone bill payments, is there a certain place all that gets recorded? Or for that matter the use of payday lenders or low debt llevel or negative payment history, how would one get to know of it? Otherwise it is a good thing that they consider the other stuff you mentioned. However I just got rejected for an american express card when I applied with high income and no info about my immigration status. When inquired they also said savings don't count at all and not my US amex card either or any other external credit limits. So I'm guessing they just look at your Australian credit history which is almost nonexistent for me. Or going by what you were saying, should my bill payments and no debt here have counted in a good way for me? but how would they have known I wonder

      • kerfuffle on 15/08/2020 - 17:35

        You need to have PR or citizenship in order to apply for an Amex I believe

        • sub102 on 15/08/2020 - 17:37

          But there was no question or any info I provided in that application. And was not told anything like that when I inquired about the rejection. May be I'll know more when the letter arrives with the reasoning

          • spitfire6 on 15/08/2020 - 22:15

            @sub102: Using VEVO to check your ID thus Visa status, I assume. Usually Amex is the easiest to deal with. If you don't have luck with them, I won't bother with others as more failed hard pulls will seriously flag you.

            On their website, they do specify Citizen/PR/long term TR aka 457 visas for eligibility.

            As others said, it's a different game down here. Check HSBC's debit one for cashback, it might work out better.

            • sub102 on 15/08/2020 - 22:33

              @spitfire6: I already have the HSBC debit but that can't be used online for cashback :( Oh so there's something like hard pulls affecting your credit here similar to the US, thanks for letting me know. If I failed with the easiest where do people start with credit cards

              • kerfuffle on 15/08/2020 - 22:36
                +1

                @sub102:

                If I failed with the easiest where do people start with credit cards

                Start with the bank that you have your main transaction account with …

  • Whensday on 12/08/2020 - 08:19
    +1

    American Express used to allow you to transfer from one country to another. It may no longer be an option, but previously you could have used your excellent credit rating in the US to get an American Express card, then transfer that to Australia (possibly with a reduced limit).

    It's not just credit cards and loans that impact your credit rating - it also includes things like mobile phone bills and utilities.

    • sub102 on 15/08/2020 - 17:36

      Where do phone and utility bill history get recorded? And yes amex dont have that anymore because I just got rejected for an amex card here although I have a US card along with an excellent credit there :/

  • conan2000 on 12/08/2020 - 10:35

    I know when I first moved to Australia on a sponsored work visa that the easiest way to get a credit card was with the same institute that I got a bank account with, and all they wanted was ID and proof of my contract/income.

    • sub102 on 15/08/2020 - 17:43

      Right if I am that desperate for a card I'd go that route and I think I'd get approved since I have savings but the banks I'm with only have cards with an annual fee unfortunately :(

  • [Deactivated] on 12/08/2020 - 11:51

    Any place will give you a $500 limit card, just build on it from there

    Had a 10k card on a 50k a year job 👍

    • sub102 on 15/08/2020 - 17:45

      just got rejected for my 2nd card when I applied with 100k :/ May be its kinda premium for no annual fee cards? May I know the 1st card you got?

      • [Deactivated] on 15/08/2020 - 17:59

        https://www.commbank.com.au/credit-cards/low-fee.html?ei=low…

        If youre point chasing and doing all that weird shit, guess it makes things more difficult 🤷‍♂️

        • sub102 on 15/08/2020 - 22:37

          Ah thanks. IT has an annual fee after first year right. Do you still have it or switched to something better? And does it affect your credit when closing credit cards?

          • [Deactivated] on 16/08/2020 - 09:55

            @sub102: An annual fee if you spend <$1000, like seriously….

            Nope still have it and Ive always got more credit than I know what to do with 🤷‍♂️

  • rambutann on 12/08/2020 - 12:52
    -1

    Yeah im going through the process of buying a property - trust me, you'd be much better off not having a credit card.
    They dont see it as a benefit if you can pay it off in full all of the time, they only see it as a liability.

    • jimbobaus on 12/08/2020 - 12:55
      +1

      Actually we just went through the process and the lender was glad we had a credit card. They used it to show we could manage finance etc. it shows responsibility with lending and that you can save a deposit while managing other financial obligations. Irony the bank when they approved our loan also wanted to give us a credit card along with the loan.

      • rambutann on 12/08/2020 - 13:14

        Hahaha yes we were also offered credit cards, but at the same time we were forced to lower our existing limits by around 50%. Even though the existing credit cards have been paid off in full via direct debit every month ever. (we have one cc each.. not crazy stuff).

        • conan2000 on 15/08/2020 - 21:51

          It all depends on the income/expenditure situation. When I first took a mortgage we had credit cards with $50k of limits and no issues, earlier this year I applied and had cards with $85k of limits and had to reduce this to $65k for one bank to approve and another bank didn't care and said I could borrow another $200k of mortgage.

          A credit card can help improve a credit rating if always paid off, but miss even a single payment and it will flag on credit reports. When it comes to taking a bank loan your credit limit is considered another committed expense. As an example - HSBC took 3% of our overall credit limit as additional monthly expenses, so $2,550 on the $85k we had, which obviously impacted what we could borrow significantly.

  • Drakesy on 12/08/2020 - 14:05

    Try again for the Kogan Black, i was rejected then immediately reapplied the next day and was accepted. I think it's just up to the approver on the day. Don't stress, it's a numbers game. There are plenty of rewards cards out there that will happily throw credit your way.

    Oh and FWIW i've had 20+ credit cards over the past 4 years and my credit score has never been healthier, just pay them off as you go and you'll be fine.

    • Ughhh on 12/08/2020 - 14:07

      i've had 20+ credit cards over the past 4 years

      Wow. How many active CC do you have at a time?
      Have you gotten a home loan during with all those CC?

      • Drakesy on 12/08/2020 - 16:04

        Yeah, just in the habit of churning them, only ever have 2 valid at a time. Cancel as soon as i get points.
        Strangely in dealing with all the banks Kogan (run by Citibank) is the only one to reject my application.

        I however cannot say that i've taken out a home loan. Though based on the credit score i'm not really detrimentally affected.

      • UrMumsOnlyFan on 14/08/2020 - 09:22

        ideally a no annual fee rewards card

        Standard recommendation would be the American Express no annual fee cards earning points in either the Amex Membership Rewards or Qantas Frequent Flyer programs. Namely, the American Express Essential credit card and the Qantas American Express Discovery card. (The Velocity/Virgin Australia option is currently unavailable.)

        There are other options, for example the Coles No Annual Fee Mastercard, but I would go with Amex for not only the points earning benefits but other promotions like Shop Small (though such promotions have become less lucrative over time).

        How many active CC do you have at a time?

        It's not hard to have many active cards. I would prefer to have fewer for simplicity, but there are ones that serve specific occasional purposes so they just linger around (no annual fee). On top of those I hope to be churning 1-3 cards at any time.

      • UrMumsOnlyFan on 14/08/2020 - 09:29

        Just saw an article Why U.S. Credit Cards are So Much Better than in Australia claiming:-

        The average American also has more credit cards than the average Australian. There are around 14.2 million active credit cards in Australia (an average of 0.56 cards per person) compared to over 1 billion in the United States (an average of more than 3 per person). In fact – and almost alarmingly – 14% of Americans have at least 10 credit cards.

        • Ughhh on 14/08/2020 - 11:55

          Have you applied for a home loan during your churning?

          Australia has better credit and banking regulations compared to the US though.

          For me, I already have a CC through my home loan, that provides points and insurances that make the free ones not worth the credit history. Apart from Amex small shop, but I can get a supplementry card without having it on my file.

          • UrMumsOnlyFan on 14/08/2020 - 22:41

            @Ughhh: Oops, didn't realise you weren't the OP. The suggestions were in relation to the OP, but no idea whether they are even looking at this since they haven't commented.

  • Jugganautx on 12/08/2020 - 22:24

    never had a loan in my life before my first home loan just phone plan and utility bills. A good deposit and steady income matter the most.

    only 2 years in and my credit rating is close to 800.

    dont put yourself into debt to get approval for more debt……

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