How often do you sign up for new credit cards?

• 

  [Deactivated] on 14/12/2016 - 20:18

  I apply yearly to avoid fees. I usually do it by cancelling one and applying for the new one with the same teller. Works.

  As for how many cards, I have only 1 and all my quantas points go there. Anything that I buy I use it and repay everything fortnightly.

  • 

    robbyjones on 14/12/2016 - 20:22

    +1

    What do you mean by "same teller"?

    • 

      Zaenille on 14/12/2016 - 20:57

      I'm guessing bank is what he means.

    • 

      [Deactivated] on 14/12/2016 - 21:48

      sorry, same person that I'm speaking with to cancel the credit card in the first place.

  • 

    Ughhh on 14/12/2016 - 21:52

    wouldn't that make your credit score look bad?

    • 

      cypher67 on 14/12/2016 - 21:59

      Doesnt make it a bad credit rating, but would impact the maximum borrowing potential

    • 

      [Deactivated] on 14/12/2016 - 21:59

      Don't know, does it ?
      I never had more than 1 credit card at a time, never missed a payment … donno though. Will it ?

      Max credit on the credit card, $6,000.

  • 

    tinnybastard on 14/12/2016 - 23:07

    +2

    Why repay fortnightly? Most cards have 55 days interest free.

    • 

      [Deactivated] on 15/12/2016 - 09:55

      Because that's when I get paid. I just use the credit card like a debit card, for the points. Free flights every year appeal to me :)

      • 

        Zaenille on 15/12/2016 - 11:02

        HOw much do you spend a year that you can get free flights a year? Haha. Domestic flights?

• 

  naritas on 15/12/2016 - 13:47

  +5

  Do you have any tips?

  Speaking as credit advisers, if you have other financial objectives in mind - such as getting approved for a mortgage or a business loan - making frequent applications for credit cards is not going to improve your chances of approval nor will it help with rate negotiations (when chatting to any lender who takes into account your credit score when pricing - which is becoming increasingly common).

  Why? Each application for credit you make reduces your credit score (ceteris paribus). Furthermore, applications for credit are retained on your credit record for a period of 5 years. So, for example, a person applying for a home loan or business loan with 10 applications for credit over a 5 year period will need to have an otherwise extremely robust credit profile merely to offset the large number of enquiries they have.

  How bad is bad? If your credit score is in the high range and you have excellent net income and net assets for your age, you possibly won't be in too much trouble. Especially if it is not more than a couple of applications for credit every few years. However, if you are fairly average (or below) with respect to credit score, net assets and net income - you could really be compromising other potentially more important objectives for your business or core debt (which typically relates to a mortgage) by making multiple applications for credit each year (especially if this is occurring year on year).

  Hope this helps.

  • 

    Skramit on 15/12/2016 - 13:50

    I found my credit score went up after each card I applied for was approved in the last 12 months. Why is this?

    • 

      naritas on 15/12/2016 - 13:57

      It could possibly be due to factors such as:
      1. The net income you reported increasing.
      2. Your net assets reported increasing.
      3. If the financial institutions you report positive credit data and you were making all repayments on time, this could increase your score.
      4. That you were utilising a smaller proportion of your total approved limits. Counter intuitively, for credit scoring purposes, a person utilising 100% of a $5,000 limit is seen as more risky than a person using 50% of a $10,000 limit (ceteris paribus).
      5. As time passed, if you stayed in the same PPOR or job, you would be seen as more stable and this would possibly influence your score.

      Hope this helps.

      • 

        Skramit on 15/12/2016 - 14:07

        +1

        That helps. Thanks.

        I think I fit in to 1,2,3 and 5.

      • 

        naritas on 15/12/2016 - 14:47

        +1

        @Skramit: You're most welcome.

        From the sounds of it, you've got a credit profile that is increasing in strength - which is to be commended.

        To clarify our earlier comment, applying for credit is definitely not to be seen as a financial blight without exception. Critically it is about context (what is the money going to be used for/what is being gained vs its cost) and frequency (occasionally is probably fine - many times each year is probably not).

        One can draw the comparison of applying for credit and its influence on one's financial health and wellbeing to eating chocolate and its influence on one's bodily health and wellbeing. A bit of chocolate every now and again can be enjoyable, and possibly even healthy - it can certainly be useful if you need a burst of energy to complete a task. Having lots of it on a frequent basis, however, is probably not going to be healthy - especially if you don't do a lot of physical activity and productively use that energy. And so, as is the likely case with both activities, when had in the right context and frequency, there are likely benefits from an activity that comes with some potential pitfalls.

        It is these pitfalls that we hope people don't lose sight of..mainly because we've seen nearly as many people burnt trying to 'point hack' as we have seen people who have benefited from it. Traditionally, wealthy and financially stable/responsible people can do okay out of it. Younger people and people in more marginal financial positions are the ones that are getting stung by this fad. Primarily because it is limiting their ability to go into business or grow their business (your credit score makes a big difference when you're trying to get an unsecured business loan), and/or it is costing them money because cheap lenders are knocking back their home loan applications because of low credit scores (most common for high LVR lending vis a vis people with small deposits wanting a first mortgage).

        Hope this helps.

      • 

        [Deactivated] on 15/12/2016 - 15:36

        @naritas: I had a credit card which had grown in limit from 15k to 36k in the past 4 years thanks to my bank sending me credit increase invites every 6 months or so. Recently, I had a utilization ratio of about 27% (across this and 4 other cards with a combined limit roughly equal to my salary after tax). I wanted to apply for a new card, so I decided to reduce that 36k to 10k, which increased the utilisation ratio to nearly 50%. In retrospective and based on your comment, I think I made a mistake. But again, I thought at the time that my application for a new card will be rejected if I don't reduce the limit on this one. What do you think?

      • 

        naritas on 15/12/2016 - 19:59

        @superready:

        What do you think?

        Thanks for the question.

        There are two issues at play here:
        1. Credit score - which favours lower utilisation of limits (ceteris paribus) vs.
        2. Debt servicing - which is strengthened by reduced limits (because lenders treat a credit limit as if it is fully drawn for the purposes of most credit assessments/hurdle assessments).

        How the above factors relate to each other are muddied by the fact that each credit reporting body and lender has their own algorithms which take into account a lot of different data points to help them score an applicant. Suffice to say, if you assume all other factors as being constant (which actually won't be true for most regular people) your score would probably be better using a lower percentage of total limits approved if (and it's a big if) you meet the debt servicing hurdles for the proposed new card limits you were applying for.

        The over-rider, however, is that if you applied for a mortgage in a few months time (for example) your credit score being fractionally lower will be relatively less important than you being unable to service the proposed mortgage due to your large credit limits. The caveat to this is if you had a credit score below say 400. In which case, if you dropped 50-100 points, your score may be considered too low for approval despite you being able to demonstrate that you could service the proposed debt.

        Hope this helps.

      • 

        [Deactivated] on 15/12/2016 - 20:19

        @naritas: Interesting points raised..thanks. The bank that I applied to decided to give me a 50k credit limit (!) because I left it to them. I'd read somewhere in ozb that if you pick just the minimum required limit (for the type of card; was 15k for my application), they may reject you. 50k is insane but from your comments it may help increase my score a little.

      • 

        kryptoz on 15/12/2016 - 22:10

        @superready: Another factor that you might consider is that banks also increase your minimum repayments if your credit limits increase, not just the balance amount. It may suit you to pay off the card faster, butif you accept the offered increase to your credit, you won't have any choice. I imagine the repayment is calculated as a percentage of total credit.
        Of course, any OzB user would point out that you should aim to pay off your cards as quickly as possible to reduce the interest — you may not always be able to get a low balance transfer offer to shunt money back and forth.

      • 

        Baysew on 17/12/2016 - 16:37

        @kryzstoff: Never heard of that one! The MMP forms part of the T & C's of the account, and is based on the outstanding balance.

  • 

    [Deactivated] on 16/12/2016 - 10:22

    Thank you for all this info.

    Did a credit score check and had the following:

    Your VedaScore 775

    This this good ? What's the max ? How can I increase this ?

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  [Deactivated] on 15/12/2016 - 15:25

  Have you checked your credit rating? If it is still "good" you have chances to get cards every 3-4 months I've heard. But mind you each time you apply your credit rating drops by 20 or so and even more (e.g. 60 or so) if you apply a few weeks apart. It takes earlier than you might think for your rating to drop below 620-30 and you'll need to wait for a long time before your rating goes from "average" to "good" again to meet basic eligibility for many of the cards.

  • 

    Zaenille on 15/12/2016 - 15:33

    Where can I see my credit rating?

    • 

      [Deactivated] on 15/12/2016 - 15:39

      can also request for free from Veda once in a year, waiting time 10 days… and you should expect a telemarketing call next day, which you could ignore.

    • 

      naritas on 15/12/2016 - 16:03

      +1

      @Zaenille, we've posted some links of where you can get it free here. Might come in handy for you.

• 

  [Deactivated] on 15/12/2016 - 15:37

  check free at getcreditscore.com.au

  it won't ding your score. There is also creditsavvy.com.au but that one is not the same as Veda (obtained from getcreditscore) that the banks use.

• 

  Priceless Class on 17/12/2016 - 19:53

  +2

  This is just my experience, but there appears to be little rhyme nor reason as to how the credit card companies make their decisions. I had a 6k balance transfer card (originally 12k) with Bank of Melbourne and a 6k points card (originally 12k) with NAB as part of home loan, of which I both applied for them about 11-12 months ago. I reduced both of these cards for a home loan refinance about 3 months ago to meet lending criteria.

  After refinancing my home loan successfully, I then proceeded to apply a bit more aggressively for cards.
  At the end of October, i applied for a coles 0% purchase card and was approved for 4k. (wanted more)
  At the end of November, i then applied for a commbank card to get the $250 cashback offer with a 1k limit (was offered 3.5k)
  At the beginning of December, i then applied for a westpac balance transfer card and was approved for 15000!

  The hit on my credit score with Veda has been from 725 to 663 to 626 to 604 (so a decrease, but less of a hit each time?) and with Experian has been 573, up to 751, stayed at 751 and jumped to 802. I imagine if I had been declined for credit the hits would be different, but as you can see they obviously they don't share all data as my credit scores are going in opposite directions and it makes little sense as to how they figure it all out and why one bank will only offer 4k but another will ofter 15. YES… I was honest on all applications.

  VedaScore goes up to 1200, while experian's top is 1000.

  All up now, i have about a third of my annual income available as credit. What would be interesting to know is which providers use which credit bureaus… Ie, If this was publicly available I could continue to take advantage of my higher score with the experian bureaus while letting Veda cool off for a while.

  To check my scores I use
  https://www.getcreditscore.com.au/ - VEDA
  https://www.creditsavvy.com.au/ - Experian

  (Ps… I wont be applying for any further cards for a little while…unless another cashback/points offer comes up that I can't resist)

  • 

    Priceless Class on 17/12/2016 - 19:57

    +1

    To add to this Bureau idea i will let you know what info I have based on my experian credit file.

    The following showed up in Experian.
    NAB - Home Loan
    NAB - Credit Card
    St George - Credit Card
    AMEX - Credit Card

    These do not show up in experian (but presumably did in Veda, given my hit in score)
    Coles
    Commbank
    Westpac

    Does this topic deserve it's own forum?…lol

  • 

    bluesky on 17/12/2016 - 22:03

    Thanks for sharing, it provides some interesting insights.

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  kryptoz on 18/12/2016 - 22:41

  I have a few cards that I use for balance transfers and typically I roll them over into a new card around the end of the interest free/low interest period (~16-24 months).

  I don't just focus on the lowest rate, but factor in the total cost over the 24months or so I expect to have the card — sometimes the fees can outweigh the savings from getting the absolute lowest rate, eg. Citi sometimes offers 0% terms but you have to pay a percentage of the balance at the time of the transfer, along with an annual fee, all of which may be more than you save compared with a 4-5% card on a lower / zero annual fee card.