In my 30s, never had a credit card but couldn't resist the recent deals with points etc that are on offer.
Credit score was 820 and then after getting an ANZ card with a 15k limit my credit score has dropped to 680?!
Why is it such a dramatic drop for a single credit card?
I'm on a six figure income, no debts and no other marks on my score.
100% correct. the credit scores here are useless and banks use their own criteria anyway.
The whole credit score thing is a thing used in the USA and these are the people trying to bring a similar system here. It's simply a marketing tool in Australia at the moment.
Banks check the score when you are applying for a home loan
No they don't. They have their own criteria.
Common false belief. The score number means nothing to them. What they actually check for is recorded credit defaults (unpaid bills) and reported repayment history (this is a fairly new thing). They also look at the open loan accounts, credit cards etc to make sure they match what you have declared on your application.
What banks actually look at overall is loan serviceability with a margin of around 2.5% in excess of their current interest rates.
They take at look at your income, expenses, liabilities, assets, personal circumstances (children etc) and bank statements to ascertain your income and spending habits etc. If you want a home loan keep your bank statements clean (for at least 3 months before applying), save lots of money, don't eat out too much and don't spend money on crap. Your declared expenses need to align with what your actually spending. Once you have to loan pay it on time and your all good.
Every bank has their own criteria and cut off points depending on their risk appetite.
@Lichen6420: Seems to be a common misconception from some on here that banks do not use the credit score obtained from a credit reporting bureau. They do. They will look at the credit score received from the bureau when they obtain the credit file and often have auto cut offs, e.g. below x you are automatically declined. This is in addition to the other criteria you mentioned which often get put together and calculated as an ‘internal credit score’ that has its own cut off. Source: work for a bank
But to answer OPs question..
the card allows for $15,000 borrowings.
Alternatively $15,000 in expenditure EVERY month ($180,000pa) if fully paid off every month during the statement period.
With some credit card interest rates still around 20% ($3,000pa) that's a huge burden to carry
Id say thats why your credit score dropped….high exposure!
Reduce the limit to $5,000
That lowers your credit risk and hence should improve your score
HI,
It's a temporary drop to flag if people are applying for multiple credit cards within a short space of time. I noticed the same drop each time I have taken credit however noticed it recovers after 2 or 3 months.
Makes sense as if your score stayed at 820, you could in theory take out multiple credit cards.
Also worth noting that your repayment history is now recorded as part of CCR so make sure you pay on time to avoid a negative stamp on your file which will reduce your overall score. Given you took out a 15k limit (credit card limits are recorded on your credit file), as this is a debt/liability, it's unlikely your score would go back to 820.
This is nonsense. I have 90k + of unsecured personal credit available to me on my credit file and have a score of 964 & 1030.
I wouldn't worry about the number, just make the repayments on time. My score went up when our home loan got approved. It went down when I cancelled my Amex. They care more about what is reported on the file than the number.
Same my score went up around 100 points when we obtained our home loan. Go figure….
Who did you get your score from? If it was Credit Savvy / Credit Simple or similar those are just marketing companies masquerading as credit reporting companies - they basically guess your credit score based on the (incomplete) information they have available to them.
I recently took out a loan and as part of the process they checked my credit score with Equifax and surprise surprise, I was up in the 900's when the other companies had me in the 700's….
There are three credit agencies: Equifax, Experian and Illion. They all give us different scores on different scales. Not all companies query the same or all three credit agencies.
I was up in the 900's when the other companies had me in the 700's….
There are multiple sites you can get your credit score from say Equifax. Do they report different scores for you? Or are they scores off different agencies?
I didn't get that score through any site, it was obtained by the lender when they were processing my loan application - since then I've pretty much ditched all the reporting sites because I don't believe they're accurate.
The report has more value than the score. It is worth revisiting because an incorrect entry about a late repayment can affect your future loan application. A low score when your history is good can be a sign of incorrect entry.
Also, check all three reporting agencies.
Through finder which is Experian iirc
Cancelled Amex? After the Masters depacle I nearly had to take them to court as they were extorting me for a gold card membership I never applied for. Bet my score dropped but who cares. Now paypal is suing me for a non honoured warranty and sure they left a mark on my file. Prudential won a default judgement against me for charging for non supplied services. Score going down but do I care??
PayPal suing lol
They use ARL as a debt collector. Dealt with them over 3 years long. At the end the ACCC dished out a huge fine. Still does not stop them to harass whoever they like. I have time on my hand. Meanwhile Afterpay gets the business, not that I ever need their credit but if they wish to make a mess, let it be a mess!
Username really checks out
Now paypal is suing me for a non honoured warranty and sure they left a mark on my file
What?
They had a big fight with ebay perhaps for a reason. Amazing if you sell you still can't avoid them. Apra need a few hundred more complaints to do something!
Chill. Not an issue unless you were not approved the credit.
Consider a drop of score means when you apply for another loan / line of credit, you can borrow less off them. So factor that for your credit limit
As you pay your credit card bills on time that score will improve.
Credit score means nothing.
Credit score is a useful indicator for people who are not so money savvy.
If you never make them more money than they are legally allowed to squeeze out of you they consider you a leech.
Back in 1912 some people met up to decide to make the stupid suffer. Not everybody agreed but they got their way.
My sisters ex father in law used to make the quote: We have to suffer so much from stupid people the only thing we can do is punish them!
Credit scores are designed by the legacy financial system to control and exclude the disadvantaged from participating in the banking system.
This system controls the flow of money, who and how it should be used. People that don't know or understand that there is a better way to do finance still cling to the notion they've to ask for permission to do banking.
There is a better way if one chooses to look.
Yep same thing happened to me a few months ago. Applied for my first one in 20 years. Got the card without issue, but then my credit took a hit. I've noticed it has also gradually gone back up with each repayment made on time so I'm guessing it is all to do with the new credit system.
Am I the only one who has never checked their credit score and not give 2 shi!t$ about it?
Nope, although a lot of people on this site think it's the be all and end all… Whatever…
I don't either. The only thing I care about is whether or not I actually get credit when I want it, and so far I do, as long as I meet the criteria.
Credit savvy has changed however they calculate their rating recently. Yes, I'm fully aware they don't see everything and are a lesser rating agency, and they push products. But they nevertheless are a data point (well, the only one).
Anyway, as I've posted before, I go through about 5 credit cards a year. And my score would stay unchanged, maybe even go up a little (mid-800s). But the last couple of cards this year actually took me into the 700s.
Just an anecdote. Your actual history (from Vero) and buying power is actually what matters in Australia.
I applied for two on the same day and was approved for both. Score was 855, will see what it drops to.
Please do report back.
Any update?
It's 850 now.
Credit Scores are made up.
Bitcoin is less made up than credit scores.
They just show how useful you are to extract money from to predators, er creditors.
Made up until you need a home loan
Your credit score is worth exactly zero when it comes to a home loan.
They look at your credit report.
Ah, so paying off the card etc will be good for this
@danlovescomps: No, we do not have the USA style system.
Not paying bills is a negative.
Paying bills is nothing.
Having zero credit cards ever will put you in the same position for a home loan as having 2 and paying them off each month.
A credit score does not determine your ability to get a home loan here.
It's really a score of how much of a sucker you are. ie. How much they see they can leech off you.
The best thing to do if you want a home loan is get rid of any debt and lines of credit (this means fully paid off credit cards).
If you don't believe me, call up a bank, a broker or whoever dishes out home loans and ask. They'll tell you the same thing.
You can have a credit score of null, 600, 800, 1000, or even i and they won't care.
Laughs in Amex platinum
Why would you want a $15k limit if you are in it for the bonuses? Credit cards with bonuses have higher costs and interest so if you were to make a large purchase it makes no sense unless you fund the card with cash in advance in which case a lower credit limit would be all that is needed. The trap is set for you to spend big on an impulse and then have higher interest to pay which would destroy the benefits.
The bank use to always try to increase my credit card limit I had to say so many times back when I went into a branch. For some people it's a status thing they think their successful if they had a high limit.
That was the minimum on the card
I can control myself otherwise I wouldn't have a card.
Tbh I have multiples of the limit sitting in cash and I have no desire to splurge on anything
I used to work for optus and depending on the credit score we would ask more verifications. Below xxx call their workplace to verify employment, below you get a reference,…. and if they were rejected by another telecommunications recently which shows on the report then we wouldn't even consider them…. that was about 10-15yrs ago.
I think if it's your first credit card they now want to see a good payment record and probably increase your score again over time. I don't think amount of credit you have worries them, but any other application will see how much credit you have and count that as debt (since you can get that any time). But as most say, don't worry about it too much. Just pay your bills and the rest will happen. Banks want to lend and give cards!
Six figures and you want a credit card… Something is wrong if you were rejected.
I wasn't rejected. I was approved. My question was about how much the score dropped by
Dropped by 140. Is that alot? What do you think it should drop by? Do you know the average score it should drop by for credit card application?
My score dropped after getting a replacement for a lost card. Seems illogical.
It's all rules and formula based, and the formulae don't always give a logical result.
Don't worry i'm sure your credit score will go up again. Just make sure you make your payments on time. I started churning credit cards since May last year (applied for 8 cards and have closed 5 of them) and my score is still excellent for Equifax and very good for Experian
Will not need another mortgage and churn to a new credit card every month or 2 (been doing this for many years). Credit score was in the 800s years ago but always mid 500s with all the new credit card applications. This is still 'good' and hear that sub 500 is where you will have problem getting finance so would not worry unless going for a big new mortgage and will want to back off the credit cards for a while
Credit scores are irrelevant. Apart from a bruised ego maybe.
Plenty form posts in the past shows people being able to get credit with low scores and people with high credit but got rejected by citibank.
Don't worry about it