Hi All,
I've recently applied for two new credit cards within the last 2-3 months, both being approved with no issues.
Prior to this my credit score on Creditsavvy was 795. Checked this morning and it has dropped to 644. (Always paid on time etc)
Just curious to see how Credit Card applications affect your credit score as I've always thought it would only affect your score if you apply for a CC and it was declined.
Thanks in Advance.
Thanks.
I was under the impression it would only "negatively" affect your score if it was declined.
we need some insiders to enlighten us really. no members work in CC departments or Veda?
I have a Credit card offer from my bank ( I didn't ask for).
If i go for it, will it still affect the credit score? Does anyone know?
I already have a credit card from another bank, so don't really need it.
I've got a pretty straightforward reasoning from a member in the whirlpool community as followed:
"I imagine it would drop.
Lets pretend Fred has a small house loan, earns $100k p/a and his credit score is 800. Fred applies for a $50,000 credit card and is approved. It would be reasonable to assume that Fred's credit worthiness will drop now that he has access to $50k of unsecured credit, which needs to be taken into account the next time he applies for a new loan." - zircosil(whirlpool)
To me this sounds spot on, but like eisniwre mentioned, would be great if someone who works in CC company or Veda could help confirm/clarify.
for Credit Savvy, No. I got 815. That is based on a credit card in 2011 and a mortgage in 2016. What i did notice is my car loan is not listed. On the basis of your post, my score should be much lower.
I assume i have 815, because i have not defaulted on my credit card or mortgage, but anyone who provides me more credit would be foolish, every company has a different credit criteria.
EDIT:
Having a re-look, it's pretty simple. Credit Savvy is based on your "risk". It doesn't take into account of your "borrowing power"
Multiple enquiries do affect your score.
Here's a pretty decent rundown: http://www.srgfinance.com.au/blog/the-biggest-factors-that-a…
Negative Factors
* Credit applications and enquiries you’ve made in the last 5 years
* Records of current credit accounts, e.g. mobile, gas and electricity accounts
* Overdue accounts (payment defaults), e.g. defaulting on a loan that you didn’t pay 60 days after it was due
* Bankruptcies/insolvencies
* Court judgements and writ of summons
* Public record information, e.g. directorships and proprietorships.Positive Factors
* Type of credit account, e.g. a credit card or home loan
* Account opening and closing dates
* Credit provider details
* Credit limit and usage and the account balance
* Repayment history.
Banks and credit reporting companies are notoriously cagey about releasing the exact info on what does/doesn't affect your credit rating so I wouldn't be waiting around for insider info.
Thanks. But, when you repay all dues and cancel the cards, won't it negate any effect that issue/use of the card would have created?
Basically the data held on your credit file is actually pretty useless. The file shows only that you applied for credit, not if it was approved or declined, or even if you actually took the credit. As a result, multiple applications for credit can be a negative thing.
I can't comment specifically on the calculation of the credit score, as this is a recent thing, when I was working at Veda they didn't provide scores.
As a result, multiple applications for credit can be a negative thing.
Is it true even if you cancel those cards after some usage?
the credit file just shows that you applied. it doesn't show if you accepted the card, or if you still have it.
There are 2 systems of credit reporting in Australia - comprehensive and negative.
Negative is the old system where the only things that appear on a credit file (and therefore included in the calculation of a credit score) are negative things. So basically enquiries, defaults, collection notices, judgements, bankruptcies. The only way you could improve your score was to not have any of these things happen. You could pay off a mortgage on time every month for 20 years and the only thing that would appear on your file would have been the first enquiry for that mortgage (and even that would have dropped off after 5 years).
With comprehensive reporting, each credit bureau gets monthly updates from credit providers on the state of any outstanding debt from a consumer, as well as the current maximum credit limit on the account. This system is in place for not just financial institutions but utilities and telcos as well. So you not only see when a consumer applied for credit, but you see the repayment history as well. The provides lenders with a better view of a consumers credit risk, as well as providing consumers with the ability to improve their credit rating/file over time by adopting better payments behaviour.
Each of these types on information stays on a credit file for set amounts of time as dictated by the credit reporting act. I can't recall the exact times, but they are available online.
Credit scores work off the information contained in the credit file, as well as geo-demographic information which is used to fill in gaps when there is a small amount of credit information available.
To answer your question specifically - each enquiry will affect your score, regardless of whether you accept or decline it, as it indicates a desire for credit, which can be viewed negatively.
The whole situation gets a bit more confusing when you factor in that not all financial institution send the same data to each bureau in Australia (Veda, D&B and Experian). So each bureau will likely have a different credit score for each person.
no it will affect when you apply.
not sure why didnt dissapear when we cancel. very very unfair. once we cancel we dont have access to that line of credit so why other people still can see it (there is a time limit like 10 years maybe but during this time people dont know if we cancel)? not sure what is the logic behind this "once apply it will stay for 10 years instead of gone immediately"