Applied for 3 Credit Cards - Reject from One for "Bad Credit History"

Kill Joy on 08/04/2017 - 15:40
Last edited 09/04/2017 - 10:18

Story goes like this.

Went to sign up for Coles Mastercard last year for promo3 coupon with free 20,000 points think at worst its a free $100. Was in the middle of exams and forgot to send my identification off at the post office so they cancelled my application 60 days after (I didnt know this).

Then recently I actually understood the benefits of using amex/visa/travel credit cards to my advantage while i am very unecumbered financially still living at home with just a small hex loan. I can easily pay each card off on time with no balance, so it sounds perfect and I get very eager ( my mistake).

So I apply for a American Express Essential and WestBank Zero immediately (have now been accepted by both), and assume my Coles mastercard application is still open. Call them up and no it was cancelled and they say just apply again. So I try again and i get declined. I think this must be an error because I've never missed a bill and have no outstanding debts, i earn a modest amount and have little expenses. I try applying again and it rejects me a second time. I call them up and this time they tell me i am rejected for numerous reasons, and one of them may be a bad credit history.

I'm in the process of getting my credit record sent to me, but that takes a few days. In the mean time i am left to stew - have I potentially ruined my credit rating with technically 5 credit card applications (3 for Coles Mastercard)? I read these stay on your report for 5 years. Will I struggle to get a home loan in the near future if i am so inclined? Will being accepted by at least one card allow me to make credit payments which will improve my credit rating? My earnings are 80-100k, if that has any effect.

I understand that only opinions can be given, i do not want legitimate legal/financial advice right now.

Update

Thanks everyone, seems it is a combination of minimal/no credit history combined with multiple credit applications. I'll stick with the 2 cards I got approved for right now until I can build up my credit history then reconsider my position in 12 months which might mean moving back to debit as their are some attractive debit accounts available.

Financial

Comments

  • kipps on 08/04/2017 - 15:59
    +6

    Too many applications in a short period of time can give certain lenders pause in extending credit.

    I don't think that it is likely to impact a home loan as there is likely to be a more rigorous credit check done for home lending than unsecured credit cards.

    Await receipt of your full credit files.

    If you may be looking at taking on credit that you need then you should slow down on the applications for a while.

  • oscargamer on 08/04/2017 - 16:39
    +3

    ^ this - too many applications on short time

    get a look at your score

    https://www.getcreditscore.com.au/

    use a throw away mobile number

    • Kill Joy on 08/04/2017 - 21:49

      Okay my score is just under 600, which is definitely not great at all. If its just the credit card applications it should sort itself out over time - I'll confirm this when my full report comes in next week.

      • [Deactivated] on 09/04/2017 - 09:20

        Under 600 is very poor
        1200 is the best score from memory
        Either you've got some bad repayment history or your file is brand new, although new files don't usually have a score under 600

        I would be definitely checking your file as it sounds like there are more than just 3 enquiries on it

        • Kill Joy on 09/04/2017 - 09:26

          5 enquiries to date, and my file is brand new.

          Edit: Just read your comment about multiple attempts on one card counting as one.

        • [Deactivated] on 09/04/2017 - 09:55

          @Kill Joy:

          A score of under 600 based on 5 enquires

          I would get a postpaid plan with Optus / Telstra / Vodafone if you don't already have one
          build your history up then reapply in 12 months

  • Pharos5 on 08/04/2017 - 16:39
    +1

    Definitely not a great start, but not the end of the world. You have a good income and, as mentioned above, something like a home loan will be a thorough credit check. They're not in the business of turning away potential clients for technicalities (and easily explained ones, at that).

    Summary: don't panic, wait for your report, get some proper financial advice.

  • Ughhh on 08/04/2017 - 17:17
    +2

    wait 3 months and only apply for 1 CC at a time

  • [Deactivated] on 08/04/2017 - 18:19
    -5

    lol 80-100k and no commonsense when it comes with credit history?

    Not sure if op is trolling or not tbh

    Cash is king, end of story

    • Kill Joy on 08/04/2017 - 21:44
      +1

      Yes I've come here clearly indicating I was over eager and made a mistake. What are you trying to contribute?

      • [Deactivated] on 09/04/2017 - 09:09

        The fact you're on an 80 to 100k income and can't get credit

        Contributing the fact that either you're crap with money or you are lying about your actual income

        But you know it's ozbargain where anything goes

        • Kill Joy on 09/04/2017 - 09:39
          +1

          I think its a bit presumptuous to assume and lump me in those categories. I'm 22 with minimal credit history, that seems to be the true culprit in these rejections along with multiple applications.

  • garetz on 08/04/2017 - 18:53
    +2

    Don't ever apply for more than 2 credit cards within a 3 month period. never more than 4 over 12 months.

    • Kill Joy on 09/04/2017 - 08:39

      So given my circumstances do you think I should wait a year to make another application or 3 months?

      • garetz on 09/04/2017 - 09:06
        +1

        You have a mark against you now, since you went for the 2, but then the 3rd attempt was flagged. You should wait 12 months to apply for a another credit card.

        btw, applying for the same card multiple times should only count as 1 attempt as far as your credit score goes.

  • Diji1 on 08/04/2017 - 19:52

    Perhaps you were on the border of eligible and not eligible previously and they tightened up their requirements a little this time.

    • jelko on 08/04/2017 - 20:15
      +1

      Earning $80,000 - $100,000 a year and not eligible? LOL

      • [Deactivated] on 09/04/2017 - 09:21
        +1

        Exactly my thoughts
        Either a really bad credit file or poor cash management

        80-100k should service even Amex cards

  • T-man on 08/04/2017 - 21:23

    Don't worry your ability to apply for the homeloan in the future if you have been decided for a credit card many times. Personally, I got 14 BankWest enquiries within 3 months in my Veda credit file and I was still able to get a homeloan a year later. Just honestly tell the loan lenders that you are not aware of the credit rating as you are still young (what I told my homeloan lender) and not familiar with the credit rating. Also, I told the lender that I just wanted to apply for a credit card to earn some points on my purchases, that's it and they said that's ok and approved the homeloan.

    I always avoid to apply any Coles or Woolworths credit cards as they tend to decline the application for no reason although my credit rating is very good.

    • Kill Joy on 08/04/2017 - 21:45

      If I told them that it would be the truth at least!

      But great, I'll hold my horses and reapply for it in 3 or so months when things calm down. Appreciate the frankness of your response.

  • tess1988 on 09/04/2017 - 01:35

    So I apply for a American Express Essential and WestBank Zero immediately, that may be your issue because they would of checked your credit file at the same time(or around), as far as i know it doesn't say if you approved or not or what current credit cards you have open, but i could be wrong on that last one

  • Pumpkin_rrr on 09/04/2017 - 08:02
    -1

    Not sure which stage you're in, but please try to withdraw all or some of the applications now.
    Then sort out /clean up the credit history.

    • Kill Joy on 09/04/2017 - 08:37

      I figure they've already check my credit history, wouldn't cancelling them prevent me from getting the cards and still have the credit applications on file? Sounds counter productive

      • [Deactivated] on 09/04/2017 - 09:17
        -1

        You're not eligible for a credit card
        It's clearly obvious that your credit file is telling them the facts

        If you've been knocked back by 3 different companies for credit then something is on your file advising them to not lend to you

        Withdrawing the application isn't going to remove the mark on your file

        Secondly why wouldn't you just apply for a credit card under your bank where your 80-100k per year gets deposited, from a credit view point you've got more chance of been approved by your bank then you do outside of your bank as you have a "history" with the bank

        There is obviously a reason you're getting a knock back, perhaps your file doesn't show any previous credit history, perhaps there is a default or debt on there you're not even aware of, late phone bill or electricity / gas bill

        Perhaps the lenders don't think you're sufficient in servicing a credit card at this point in time

        The credit score is worked out on my factors, i wouldn't be applying for credit until

        1. You get your credit file info
        2. You work on getting / building a credit score (phone account etc)
        3. You can show sufficient good repayment history, at least 3 months but 6 months to a year is going to do best

        4. You apply for a card through your bank, this is pretty much the first thing you would do, if they knock you back then it either shows, poor savings history or excess overdraws / account not kept in good standing

        5. Clean up your credit if it shows any black marks

        6. Stop applying for cards, the more enquiries the less chance you're going to get approved

        I've made many mistakes in my time and ended up with 40+ enquiries on my credit file, thankfully it's much better today and I've rebuilt my history
        I don't believe in using credit but that's your choice

        For 80-100k you should be comfortable servicing a credit card, the fact you're being knocked back tells me there is either a very black mark on your credit file or you're brand new to the credit world and that you need to build some history and trust

        This is my contribution to your post thanks to your comment last time

        • Kill Joy on 09/04/2017 - 09:36
          +1

          I've not been knocked back by 3 companies - I've been conditionally accepted by the other 2 pending income verification. One offered me to upgrade to a higher limit and better card within hours of applying. I declined the higher limit.

          I know withdrawing the application wont remove the mark on my file, thats why I was implying withdrawing was useless.

          The bank I am with has a terrible credit card. I don't need the credit card because i am constantly over extending myself, I am paying off all my obligations just fine and saving a large amount. I want a few for the benefits (as I discussed in my OP). Have you read it all objectively?

          Reading your responses, this appears to be due to the fact that I have no history. I pay half the house, phone, data, land rates of my parents house which all goes through their name (i live at home). Ironically part of the reason for getting the credits was to help me build a credit history.

          Not sure why you don't believe in credit spending - if you are frugal and live within your means, you get to reap all the benefits of the card for free as long as you zero balance your account by end of month. I cant see a down side unless you can't control your spending (not saying that is the case for you).

        • rompastompa on 09/04/2017 - 09:50

          @Kill Joy: I'm a little ignorant with the whole credit rating business as I've always lived within my means. However, if you get a 'terrible' credit card, doesn't that give you a good rating for now?

          Get the terrible card from your current bank, get the good rating, get the good cards in a years time.

        • Kill Joy on 09/04/2017 - 10:00

          @rompastompa:

          I think their is an incorrect stigma around credit cards being for those living outside your means. If you've given yourself a 2-3K limit (depending on your circumstances, more), you can use the card to pay off your bills and keep your money in your high interest bank account earning you some extra money that month all the while enjoying the reward points, extended warranty, 3 month return period, etc that the card provides. I shared your opinion until recently.

          And yes you are right I imagine, except I just switched to a new bank last month to make use of a 3% interest rate (ING). I could apply at my previous bank (St george) who i was with for 5 years though who might be happy to get my business back. If my bank west card somehow gets rejected as well then I'll definitely consider that, thank you.

        • [Deactivated] on 09/04/2017 - 10:02

          @Kill Joy:

          The way your post was worded implied three cards, so my bad
          secondly if you are approved for one card, then ensure you PAY the full balance off every time
          Yes the bank offered card sucks, but guess what, its a good way to build your history over time, and a much better acceptance rate as you have a "history"

          I don't need to use credit, probably due to the fact that its not my cash, the banks cash offered to me, I can understand cash flow situations where it would work but for me, saving up and paying in full means I get

          1. Better discounts with Cash than credit
          2. Own the item outright
          3. Not having to extend credit to purchase items

          Its the spiralling start to debt over extending and relying on credit cards

          Living at home for an extended period of time would be good to a lender, means you aren't moving around (skip tracing) and seem settled down

          Benefits of a credit card are points, I don't spend enough to see the value, good for you if you do
          I do quite alright with a cash / savings setup and do better with cash.

          No History and a score of under 600 just doesn't add up, your score should be at least high 800's or maybe more based on the enquiries etc, could be the fact its a new file but that is a really poor to average score.

          Good luck, ensure you build on your history as you will want that score to be better if you want a home loan

        • [Deactivated] on 09/04/2017 - 10:10

          @Kill Joy:

          Thats fine, I get extended warranties with my Macquarie Platinum account (non credit) and Earn points with my Bankwest Qantas Account
          I do agree keeping the money in savings at a higher rate is still a better idea, however many people don't discipline themselves with credit and keep on moving balances around

          There are benfits to a credit card, possibly where cash can't be accepted etc but for me I get all the benefits of warranty, travel insurance and points with two debit mastercards :)

          The incorrect stigma is people relying on credit cards, not saving and buying and item outright, interest free deals for 60 months on a 1300 dollar tv usually yield overall price hikes to nearly 2000 dollars for the same item, I walk in with cash and tell them I want it for x amount and they usually budge, cash up front to them is better than the risk of someone defaulting on an interest free item

          Business 101

          I control my spending fine, I once was in a poor situation with money management (shared housemate situation - not paying their share of rent / forcing me into further debt etc) but managed to get rid of my debt and start clean, paid it all back and now doing better than ever

          I know I don't have the benefit of being able to put stuff on 60 months interest free but making sure I save for an item and own it up front is better than having to pay all these different cards off over time

          What makes me sick is banks offering 18-19 year olds 25-50k credit limits without taking into the account the maturity level of some of those people thinking they can rack up 50k of debt and just go bankrupt to not having to pay it back, thats the stigma I completely hate with credit

          For those who are good with cash flow / credit spending, thats great, it works for you, you get points for each purchase made with credit then move cash to the card, smart way of earning something for nothing, For me its pointless as I don't spend nearly enough to even find the need for the points and flybuys for shopping + Qantas FF points for parking are worth it for me.

        • Kill Joy on 09/04/2017 - 10:16

          @shawncro 222:

          All your points make sense to me.

          I may need to look into the macquarie platinum and Bankwest Qantas Account, sound like good options to move away from credit. Depends what the interest rates are like, fee structures seem sound.

          Does paying cash really net you much discount these days? Besides the obvious Amex premium in some places I have not noticed any issues paying with visa credit/debit vs cash except for minimum purchase at small restaurants. For the places that charge a fee I usually have $100 on me.

          And yes it can be a spiral for those susceptible - but I think its comparable to drinking. Alcohlics shouldn't touch it in fear of overindulgence, but a drink or two often improves a nights enjoyment. There are better examples, but I'm sure you get my drift.

        • [Deactivated] on 09/04/2017 - 10:27

          @Kill Joy:

          Spot on with the alcohol / drug points, spending can be an addiction just like any substance
          It could be greed too, wanting to fit in with their circle of friends on higher incomes, superficial people irk me, but at the end of the day I drive a company car, they pay for tolls, fuel, servicing, rego and insurance, costs I don't have to worry about
          They also cover my internet and pay for my mobile phone etc

          With the Macquarie Platinum Account

          1. I get a warranty extension + platinum account features
          2. No fees whatsoever for atm withdrawls or international purchases (great for ebay / paypal etc)
          3. No account fees
          4. 2.65% interest on my savings (yes its lower than ING BUT..I don't need to deposit 1000 per month to yield atm savings etc)
          5. Ability to direct debit from savings account - no other company offers this
          6. Awesome netbanking app
          7. Android / Apple Pay
          8. Ability to see spending within the app, nice graphs

          http://www.macquarie.com/au/personal/bank-accounts/transacti…

          I had the 4000k minumum waived by signup via ozbargain link earlier in the year

          Its a bloody good account

          As for cash discounts, more often than not I save a lot more than I do with interest free deals, The good guys for example, pay less pay cash, bought a LG 55 inch TV for 950 cash, was advertised for 1199 but I priced matched videpro for 999, I said cash now 950, sales rep said Yes, I saved not only by price matching but by paying cash, sure its 50 dollars more but look at the net yield of the points benefit, as I said I don't spend enough to earn enough points so the cash discounting method works for me, overall it leaves more cash in my savings + no threat of interest fees if I do not pay it off in 60 days etc

          The benefits of a credit card are, points for your purchase, 60 days to pay off (sometimes longer), before interest, money not tied up or dipping into cash etc, better cash flow management

          Everyone is unique, cash has always worked best for me, and when it comes to dealing with trades people and anyone else in the industry, cash jobs end up being better off savings wise, the only time I do pay with my Macquarie card is for stuff like game consoles + anything electrical kitchen or laundry wise

          Just remember though the australian consumer law still applies, provided I keep my reciepts (macquarie bank allow you to upload them into your app btw and also do tax reporting too all built in)

          The old saying is Cash is King, its still true even many years later

      • Pumpkin_rrr on 09/04/2017 - 09:40

        "Withdrawn" is better than "rejected".

        • Kill Joy on 09/04/2017 - 09:44

          Thanks for clarifying.

          As far as I can see Bankwest is happy to go forward pending income verification (from a phone call we had), and I've now just been approved for Amex. Seems I am just over the line for those two so should keep them on to improve my credit history with timely repayments if anything. Do you agree?

        • pencilman on 09/04/2017 - 09:56
          +2

          @Kill Joy:
          Good news! Lock in the credit card you want.

          If approved for both cards, keep them both since you've already done the hard yards applying for them.

          Make sure you ALWAYS pay the balance (or minimum) on time, and your credit rating should improve over time.
          Don't go applying for unnecessary credit for a while - say 6- 12 months.

  • dcep on 09/04/2017 - 12:52

    Just a note and you might already know that the credit limit combined from all cards will impact your borrowing power for homeloan.

    • Kill Joy on 09/04/2017 - 13:16

      Yes,I read that your credit limit x 3 is what they remove from your maximum loan value. So $18k in credit limits would mean a reduction in my maximum loan amount of $54k. When I get to that point I'll consider giving up some cards if necessary.

  • Yola on 09/04/2017 - 16:44

    I believe that max score is 1000. My son also had a score of 600+ when he started his first job.So do not stress. Yes use credit cards for all the reasons you stated but manage the points and make sure they do not expire. Pick one program and stick to it. Qantas is good because as long as points are being added to it the old ones will not expire. Some eg. Krisflyer the points expire within a set period of earning them. When you are starting out you may not be able to earn enough points to use them effectively. Yes always pay off the card in full. Do not apply for anything for 12 months. What do you do to earn this money in your first job?

    • Kill Joy on 09/04/2017 - 18:45

      Thanks for the information, I'll be doing all of that after getting a lot of helpful advice from the community here.

      I have just entered my 3rd job as a Mid level software developer, been working full time for 4 years will studying. Mind you I was earning minimum wage as a junior for 2.5 of those years until I realized my value.

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