Applied for my first credit card, got declined - what to do?

I just tried to apply for the coles no annual fee master card, and got rejected. It was the fist time I have ever applied for a credit card.

I have never had anything on credit before in my life (so should have no credit history). My income also exceeds the minimum income necessary for the card ($25k).

What did I do wrong? Is there anything I can do about this? Does this mean that no other credit card provider will accept my application?

Thanks heaps for the help Ozbargain.

Comments

  •  

    Did you put down high living expenses? Or renting out? Those negatively affect your borrowing power.

    • +1 vote

      That's what's so strange, I only have like $200 of living expenses per month (I live with my parents).

      I also stated this in my application.

      I still don't know why I was rejected.

      • +4 votes

        Keep in mind super low expenses on the application won't necessarily help. You would probably get declined if something in the application didn't add up (literally).

        Eg. Earning $25k per year, you're saying only $200 in expenses per month, you should end up with $20k+ in savings for every year you've been working. If not then they would assume you are not being truthful on the application or don't really know your own financial situation. Obviously it's not black and white but it's something else to go against you as well as having no credit history and no history with Coles as a bank/creditor.

        If you decide you just want a card to go towards your credit history it's probably easiest just go to your usual bank, at least you have some relationship with them already.

        • +2 votes

          Yep, based on what you've provided this is probably the reason for the decline. Are you sure this is really your cost base? While I obviously don't know your circumstances, even if you are living with your parents only spending $200 a month seems ridiculously low (especially so when you consider the way credit applications work … amongst other things they are trying to work out if your financial position is believable/sustainable).

        •  

          @Seraphin7:

          I said I had $300/month expenses living at home with a $60000 income, and I got approved.

          And I actually was telling the truth.

        • +2 votes

          @random12:

          Their formula's probably have a minimum expenses amount that it uses if your expenses are too low (ie. $1000).

          With a 60k income that still allows plenty of room, but with 25k the minimum might just push it past what they are comfortable to approve.

      •  

        You were rejected because you are a young kid, with very little income

        When I first tried to get a lone I was rejected and kept thinking "why wouldnt they want to get their hooks into me"
        Why? Because young kids have a high chance of not paying lones

        It doesnt matter about you, it's your age bracket
        Yeah it sucks

        If you were making 70k it would be different, but you arent

      • +12 votes

        I still don't know why I was rejected.

        They're just not that into you.

      • -3 votes

        Some work with line of credit you most like you had no file file you gave them sue as (profanity). pro tip tell you make 500 per week and rent 200 and food other stuff is 150 sale boy or girl you tick all boxes. can ask do you pay mobile phone bill on time never not pay it???

  • +2 votes

    ask for a low amount 1st, $500 or $1000

  • +25 votes

    My income also exceeds the minimum income necessary for the card ($25k).

    https://www.ozbargain.com.au/node/299944

    Also as I am a uni student working part time on near min-wage, I only have a 20k annual income, so that may reduce the cards I am eligible for.

    Who are you lying to, them or us?

    And what do you even need/want the card for?

    • +6 votes

      Try apply for a card issued by your bank. I have a $10k credit limit on a measly $16k income.

      • +14 votes

        Wow…!

        No offence but that's pretty irresponsible of the bank

        • +7 votes

          I started off with a lowly $1500 limit on an income of $8000, then it jumped to $3000, $5000 and then $10k. Income had increased by approximately $2k each year. I guess my decade long history with the CBA was looked upon favourably, and it was them that offered me a card in the first place.

        •  

          @niggard: I bet you worked for a lot of that period also.

        •  

          @Diji1: yeah I was (still am) continually employed when they offered me a credit card. When I first started I made a grand total of $60.23 a week lol. About two months into my work the CBA cold-called me during dinner one evening and offered me a card. I sometimes wonder what would've happened if they didn't call me - would I have difficulties getting a credit card later on? Would I be able to turn a student credit card into an awards card? It was the best marketing call I ever answered.

          Perhaps the bank saw I had about $7000 worth of savings with them, and my lowly income wouldn't have mattered if I incurred the maximum debt my credit card could incur. I can pay off my card twice over if I had to.

        • +1 vote

          @niggard: I had a similar history with CBA excerpt that my credit limit went up to 35k before I rejected their next offer.

        •  

          How much money do you have saved with this bank?

        •  

          @nobarginsarehere: me? The lower end of $20k.

        • +4 votes

          They're banks. Since when do they even care about the wellbeing of the average consumer lol.

          My current CC provider keeps trying to increase my card limit to ridiculous amounts (claiming 'loyalty' privileges), it's pretty stupid.

      •  

        that's definitely a CBA tactic. scum are all around uni campuses doing that shit.

    • +1 vote

      My actual income is a little over 25k. I do not know why I have written 20k in my previous post - it was an honest typo.

      I don't need a credit card for anything honestly, but I was advised (by ozbargain!) that getting one and making repayments on time would enhance my credit.

      As for why I wanted the coles one in particular - it has a 24 month price protection insurance policy which sounds amazing to me.

      • +10 votes

        In the words of Admiral Ackbar - It's a trap!

        Seriously, just don't, not at your stage of life. If anything happens financially it could be very easy to grab that bit of plastic and buy what you want, telling yourself you'll pay it off shortly.

        Wait until you're out of uni and working full-time before you get a line of credit like that.

        (all imo, some people are very strict with themselves and wouldn't touch it unnecessarily, but the dangers are there)

        • +4 votes

          Not all young people are irresponsible and I'd like to think OzBargainers are more responsible with money than average…

          I've had a CC since my teens but stopped using it when ING came out with a 5 % rebate. And I paid the full balance every month!

          OP seems to have made a rational case for obtaining a CC for the perks.

        •  

          @Scrooge McDuck: Same hear it teach you pay stuff off.

        •  

          I'm still a uni student and i treat my CC as a debt card. I use my CC everyday and pay it off every week:) I just got one to build a credit history. For the last 5 years i have paid less than $100 interest, mostly because i forget to pay the CC or i was overseas and the bank keep blocking my internet access. But yeah i still agree with you as some people cant control their money.

      •  

        Yeah the free price protection on the Coles card is interesting to me too. Might try applying for it a few weeks before a big purchase.

        •  

          Yea, it's incredible honestly. I don't see how they profit off it… unless they rely on people just not making claims.

          You could buy a smartphone for $1200 today, and because tech depreciates, in two years' time it will be $600, so the insurance company will just give you the $600 difference.

          The insurance company is effectively insuring the depreciation of your purchases - they are insuring something that is (almost) guaranteed to occur. It's amazing.

        • +1 vote

          @kindshibe: https://financialservices.coles.com.au/~/media/financial-ser...

          You pay 1% of your monthly closing balance up to $50. Plus there are claim limits per item and 12 month period.

          If they didn't make money from it, it wouldn't exist, that's for sure.

        • +3 votes

          @John Kimble:

          Yea I guess they also rely on people racking up huge bills from the 1% fee in addition to not making any claims.

          I guess I just planned to pay off the balance before the statement day, and therefore not pay any insurance fee at all (they can't take 1% of a $0 balance!).

        •  

          @kindshibe: actually, i dont think that's how it works. They charge 1% of monthly expenditure in total (I have the Coles CC and they offered me this insurance but when I asked about the fee,the guy on the phone told me how I stated above.

        • +1 vote

          @lunartemis:

          The guy on the phone was wrong.

          I have the coles CC (as do a couple mates), none of us have ever been charged the 1% fee.

          As @kindshibe said, cant charge 1% on $0

        •  

          @cheesecactus: does that mean at the end of each statement cycle, your balance must be $0?

        •  

          @lunartemis: Apparently so; as long as your balance is zero before the day of the month they generate your statement, you will not get charged the "premium". Many people have confirmed this on this site and whirlpool.

        • +1 vote

          @John Kimble: I keep mine $100 in credit just in case the bpay always takes a couple of days. But never get charged any fee. Being a Coles TM we also have no annual fee on.the rewards mastercard. So a great deal!

        •  

          @kindshibe: Down Down Deeper & Down!

      • +1 vote

        In my experience credit card applications can have the reverse effect on tour credit history. Particularly now since you were rejected. My credit rating dropped quite a bit after a few credit card applications. Stayed that way for several months. Only jumped again recently after cancelling 2 cards. Not sure if that was a coincidence or not.

        • +1 vote

          This is the truth. I have worked in financial services for over 10 years, including being a credit analyst.

          Credit cards will not improve your credit rating. If your aim is to get a home loan, which I assume it is, you are far better off not having any cards and having a regular savings plan.

          I never saw an application with 20% deposit of genuine savings rejected. Finance institutions will even lend to people with bad credit if they can prove genuine savings!

        •  

          Most companies are not doing comprehensive reporting. So it's likely your accounts were never shown on your report (and thus it was not closing them that changed your score).

          Only the inquiry from the application would decrease your score.

          Closing an account that has been paid on time will in most cases decrease your credit scores. (It probably wouldn't decrease it now, as few are doing comprehensive reporting, but it would in a few years when everyone's doing comprehensive reporting).

      •  

        The Coles one gives you free grocery deliveries for orders over $100, might not be applicable to you as you live at your parents though.

      • +3 votes

        enhance my credit

        NO.

        Credit cards do NOT work like this in Australia. So many people read misleading info online after hearing about the US system.

        If you get a coles credit card, all that will appear on your credit report is essentially "Coles - credit card - $1000"

        No increase in "score", no details about paying it off on time, nothing. It simply looks like a liability to any other lenders.

        I highly recommend you do not get one just for the sake of getting one.

        •  

          My understanding is that Australia is moving towards the same system as the USA (for better or worse)… Hence all these new websites offering scores for a fee. Not sure how long it will take though… Few more years yet.

        •  

          The system is very gradually changing to a US style system, but most of the banks are resistant to it ( due to cost, and also sharing data with competitors ).

          Comprehensive Credit Reporting was signed as legislation from March 2014, but so far it has only been voluntary. There has been talk of going to start making legislation to make it complusory at the end of 2017 if not enough participate. Give it another few years, and everything should be in place by 2020 whether banks like it or not.

          One factor that US credit scores take into account is the age of the account. The older the account, the better the score. So you can open a card now (a no annual fee card would be best) and just let it get some age. It won't show as a positive immediately, but it will eventually.

  •  

    do you have any other credit history?
    eg mobile phone contract, car loan?

    •  

      I have prepaid everything my entire life - so I don't even have a mobile phone contract to my name.

      • +1 vote

        yeah you probably have no credit file, go on one of those free credit checking websites and check, if it shows an error or no information found then you dont have a credit file.

        •  

          I just checked it using www.getcreditscore.com.au

          It said my credit score was "good" (between 622-725 - not providing my actual score for privacy reasons - through I don't know what anyone can do with my credit score)

          Is "good" not good enough for credit card companies?

        •  

          @kindshibe:
          give it ago on https://www.creditsavvy.com.au, it will show any previous credit applications etc.

        •  

          @tuzii:

          Hey tuzii, I just tried creditsavvy. It also said my credit score was "Good" but the actual score was a bit higher than www.getcreditscore.com.au.

          I might be blind, but I don't see a where you can see a list of previous credit applications.

        • +1 vote

          @kindshibe:

          the websites giving free scores dont show your credit history.

          You can apply for your credit report for free once per year from http://www.equifax.com.au/getcreditscore/

          But if you haven't made any applications your report will be empty.

          I find my report is absolutely meaningless and I've had 10000 CCs, a mortgage which was refinanced etc

        •  

          @CheapskateQueen: getcredit website does give you your credit inquiry history. I have an account and it shows all my previous credit inquiries in the last 36 months

        •  

          @kindshibe:

          If you login to credit savvy and then you look along the top of the webpage.

          There is a line of icons.

          "Dashboard" , "Credit Report Card" , "Credit Index"

          Click on those.

          One thing I have noticed is that Credit Savvy usually has much less showing than other places. Less Banks etc inquire on your Experian credit report (which is the one you see through Credit Savvy) because Experian has been openned for less and has less history.

  • +10 votes

    I was in the same boat, 10 years ago when debit cards were still a rarity. Nowdays I don't even touch the credit card, savings all the way.

    I had to upgrade to a fulltime $30k job to cross the line for a $500 limit. But I only wanted it for online purchasing, as I was treating it like a debit card anyway - prepaying savings to it before I needed anything.

    Just DON'T go applying for any more in the next month or three, 'excessive' amount of applications on a blank record won't be seen favourably down the track. If you do want a credit record to kick you off, a contract mobile plan would do nicely, then just don't default on it.

    Otherwise, don't stress about missing out.

    • +1 vote

      Excellent answer.

    •  

      yeah i remember more than 10 years ago having a debit card was like having a credit card, had to go the extra miles with different banks to get one, some of them even required that you be employed and australian citizen to be eligible, nowaday they just throwing debit card into your face even if you were Bernie Maddoff

  •  

    Yes, sometimes some lenders don't want to approve if you have no credit history. It's the same catch 22 as when you look for your first job and they say you don't have experience, but you need a job to get experience.

    I got knocked back for a phone contract when I was younger, only explanation was because of no credit history (only was ever a supplementary cardholder on my parents credit cards uptil that point).

  • +8 votes

    Try serenading them with the jingle to increase your chances.

  • +5 votes

    Take it as a sign. dont bother with a credit card. Get a debit card and live within your means. You will be far better off, especially considering the astonishing interest rate that you will be charged.

    • -3 votes

      I am mystified why someone negged your obviously true comment. Have a plus-vote.

      •  

        I do agree with the advice and will up-bargain both comments clearly made in good faith, however going off topic or "knowing better than OP" is generally poor form when responding to a clearly defined question.

      • +7 votes

        Probably because it was an absurd comment. I have multiple credit cards (ever since I was 18), have never paid a cent in interest and have earnt hundreds of dollars in rewards.

        If you're reckless with money then no, it's not a good idea. No need to tar all of us with the same brush though…

    • +18 votes

      Credit cards are just fine as long as you can manage your spending and pay off your debt each month. We do all our monthly expenses on CC and pay it off in full on due date. With our current Coles Card we get double points for every dollar spent. On average looking at about 4-5K in points each month equating to about $20-25 in rewards and that's not even including any bonus points i get for being a flybuys member and taking up their offers. If on the other hand you intend to rack up debt and not pay it, then no, a CC probably isn't a good idea. But a CC can be used to your advantage if you are smart about it.

      • +1 vote

        Agree. We use the $80 fee version and my last flybuys statement said I have made $440 in total from using it. Never missed a payment and all our bills get put on and we don't make any purchases unless we know there is enough money sitting in our savings

  • -3 votes

    My advice, don't do it a credit card is a trap and will actually work against you when you want to apply for a house or car losn as banks see them as a type of loan already ie: if you have a $1000 limit then it's assumed you owe a $1000 on your credit card, regardless of whether or not you owe anything on it or made regular payments, you still have the potential for owing that amount, So it's actually a liability.
    If you want a credit history then get a phone on a contract you can easily afford and make sure you pay it on time. Credit cards are never a good idea and can't beat a good savings history which at the end of the day, when it counts is what banks will take notice of

    •  

      Not always the case for mortgages. The brokers I've spoken to say they just want to know what your expenses are - not how much you have in available credit. I think they only consider minimum monthly payments for credit cards. They don't even worry about HECs debts either.

      Credit cards are quite a useful/good thing if you aren't using them for the sole purpose of a loan of cash you don't have.

      • +1 vote

        Nope, they have to go by the limit. If a broker is using the outstanding balance then he is being non-compliant.

        •  

          Hmm.. that's actually quite worrying to hear that. A quick consult with google says you're right. I've lost a little more faith in the professionals that I talk to now.

      • +2 votes

        Never heard of total credit card limit not being a factor when applying for a home loan.

  • -1 vote

    Get a Debt Card, simple

    I have old CC with $45K limit, which is nothing today, but was a reasonable amount when i got it 20 years ago.
    And even so, i know use Pre Paid CC and Debt Cards more often

    I will NEVER online shop with a CC that has a big limit.
    So i find the PP CC the go

    Ask yourself, why do you need one?

  •  

    If you need a card to purchase online with, get a travel visa card. That way if you want to purchase something online, you can deposit the exact amount on the card so you wont be scammed. A travel visa is a debit card you have complete control over.

  •  

    Get a prepaid Mastercard or Visa or alternatively a debit credit card

  •  

    You have to have money to borrow money

    Yeah, it makes no sense haha

    I'm guessing you are young, welcome to the real world!

  • +3 votes

    Maybe Coles has tougher restrictions.
    When I was a uni student with youth allowance, i got a CC from one of the big banks.

    •  

      Same. At uni they offered everyone a $1000 limit credit card. Maybe the lending laws have changed?

      In a logical system an existing, connected savings account would be continually assessed to determine your ability to repay a small loan at ridiculous interest rates.

      The only benefit of credit cards is when you're going out in a raging ball of fire (bankruptcy or leaving to an obscure country for good).

  •  

    Maybe try AMEX.
    Read couple comments that they don't normally do detailed checks on application.
    With that said, the credit limit are pretty high (10k+) so make sure you can manage your money well and don't over spent.

    $200 per month is possible for uni students so I believe you there cz I was like that back in uni (not anymore ;(

    •  

      Amex cleared me very quickly and easily without so much as a call with a 2.4k credit limit. However, they do expect a high income so his 25k might not be enough and just mark another X on his credit history for credit application.

      •  

        ^ income requirement. But also depends on the type of AMEX.
        Mine was cleared overnight and it was my first time ever having a credit card (I prepaid everything before this too - so I assume I had no credit history also)
        It came with 25k limit, which I called up the customer hotline to reduce to 8k to manage my credit risk.

  • +6 votes

    If you are applying for Coles credit card, I suggest you to hold because Coles Financial is very strict particularly to those with no credit history. I also failed once when I have no credit card then I applied again (successful) after getting another credit card.

    My advise is to firstly apply a credit card with your bank. The chance you get one is higher than the one from Coles Financial.

    Once you have a credit card, wait for couple months e.g. 4-6 months or better after 12 months, then try to apply for Coles one.

    Good luck!

    • +8 votes

      Or if you are good at paying the full amount off during the interest free period you can maximise returns in your home loan offset account, savings account, and rewards points.

      • +3 votes

        So much good has come from my Coles Credit Card. It's No Annual Fee so I have literally never paid a single cent for it. I always pay off the required minimum a few days before its due so no interest EVER paid, and I earn flybuys points as a bonus. I also am not stupid and don't use the credit card to pay for things that attract credit card fees unless there is literally no other option to avoid fees altogether (I think that happened maybe once in 3 years?) It also gives me up to 45 days to pay off the purchases, and that money sits in my mortgage until the bill is due, saving us on mortgage interest.

        Yes definitely not always a bad thing - if you know how to work it to your advantage

  • +2 votes

    I am in a similar situation to you except i did a silly thing and applied for 3 credit cards at once. One of those was Coles which i was approved for a year before but never followed through, then suddenly i was ineligible. My credit score is now 500 and something, but luckily 2 of those cards accepted my application (AMEX and Bankwest) so I can now build a credit history. As others have said coles is very cautious of young and low income individuals despite what the criteria says. Without a large income you'll struggle to get any cards right now unfortunately without a credit history.

    I agree with others that you should get a phone plan in your name (even a cheap data one you dont use often) just to get a bit of history. Will make your life easier in 12 months to make further applications, but dont try coles again until you have another card or a larger income (or ideally both). Do not apply for more than one card, and wait a year before you apply for another card (or at least 6 months).

  •  

    Apologies if there is a very obvious answer to this, but can you not just ring them and ask why?

    •  

      Usually they won't tell you any specifics. Something generic like "you didn't meet our lending criteria".

      No harm in asking I suppose.

  •  

    Hey kishkebabs, It's a godsend to have credit denied absolutely the best thing ever, years from now you'd be the one laughing with no debts. It's not a bad thing to use cash and only buy with money that you have not with money you don't have.

  • +12 votes

    What's with so many people assuming that having a cc means debt forever and ruining your life? Stop assuming others are as financially irresponsible as you are with cc.

    I've had one since I was 18, no debt, and I only spend what I have in my savings to allow me to pay in full every month. Some people shouldn't have cc, but it shouldn't be a blanket assumption.

    •  

      What's wrong with cash?

      •  

        I don't recall saying there was something wrong with cash?

        What's wrong with using cc if you're self disciplined?

      •  

        its a pain to carry around :P Even if I didn't have a cc I'd be using 90% debit card instead…

      • +1 vote

        I can leave my cash in my ing savings account to earn extra 3% interest.

        Also cash doesn't give me 0.75% cash back on purchase, extended warranty and price protection. Like my credit card does.
        My credit card also gives me 55 days interest free. Never paid interest in my life.

        So why would I use cash?

        •  

          Oops Amazon setting operations here! PayPal cards now available in USA with option to buy now pay later called PayPal stretch.

  1. Spackbace on 20/04/2017 - 22:43
  2. derk on 22/04/2017 - 09:10
    +18 Loan*
  3. hazzad on 21/04/2017 - 16:05
  4. Spackbace on 20/04/2017 - 23:01
  5. Scrooge McDuck on 22/04/2017 - 18:10
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