My Credit Score Got a Massive Hit after Applying a CC

Hi Guys,

I just wonder why my credit score got a hit about 100 points down after applying a credit card (15k limit)from Excellent (908) to Very Good (808)

I have not made any credit enquiries for years, at least 5 years but once I applied for a credit card then it was dropped by 100 points.

I never have any late payments, defaults etc - a clean record basically.

I plan to refinance my investment property, not sure what will happen with my application and credit rating if I proceed with this.

I wondering what has happened?!?!
Please share your experience. Just make sure you check your credit rating before applying any credit.

How is your credit rating?

Poll Options

  • 10
    Excellent
  • 23
    Very Good
  • 8
    Good
  • 5
    Average
  • 4
    Below Average

Comments

  • +5 votes

    That's normal

  •  

    Yep normal, consider lowering the card limit if you still need the card

    • +5 votes

      wouldn't make a difference, the credit score company doesn't get informed that you lowered your limit. As far as I've seen, only the amount initially applied for is shown (though sometimes even that is omitted)

      •  

        I think this might change with CCR (NAB has started this month, other banks to follow), as credit limit and repayment history are reported.

        •  

          oh nice! so are the credit reporting agencies able to use this info?

          I might be wrong but i have never seen a section called "Current accounts" or "regular monthly payments" on my Dun and Bradstreet report. Great that nab is on this though.

        •  

          @R-Man: From the NAB media release:

          Under Comprehensive Credit Reporting, positive credit information will be added – including accounts that have been opened, credit limits on those accounts, and details of monthly payments made.

          I'll be interested in seeing how detailed this information will be on credit files.

    • +4 votes

      Although the bank will ask for all card limits (and perhaps evidence of this) when the OP wants to refinance.

  •  

    Exact same happened to me, was in 'Very Good' for years then I got a new Amex card (Amex issued) and ANZ issued Visa and my score dropped down to 'Good'.

    Does having access to more credit lower your rating? If so, should the fact that I have recently closed my NAB cards increase it again?

    • +1 vote

      should the fact that I have recently closed my NAB cards increase it again?

      No, because they don't record account closures to your credit file.

      I think the only thing that increases your score is time with lack of enquiries, and no poyment defaults.

      • +1 vote

        Thank you, interesting.

        So surely people who pursue credit card points bonuses have lower credit ratings due to repeated applications?

        • +4 votes

          Probably. Doesn't stop them or the banks from giving them cards (usually).

        • +2 votes

          So surely people who pursue credit card points bonuses have lower credit ratings due to repeated applications?

          Yes, absolutely. A couple of years ago I applied for an AMEX card with 80,000 bonus points, then two weeks later applied for an ANZ card with 100,000 bonus points (approved for both). Couple of weeks after that applied for a Citibank with 100,000 bonus points and was rejected, LOL.

          I stopped after that. Got an awesome business class overseas trip out of it though :-)

        • +2 votes

          @SavageCarrot:

          Same. I have a business class trip to Europe to look forward to thanks to credit cards points :)

  •  

    Also, how much does your credit score actually affect your chance of getting a loan / mortgage etc?

    •  

      Thats what I am curious about at the moment. I plan to refinance my loan and not sure what tge impact would be.
      If every credit application/query drops your rating to lower rating category, that would be disastrous.

      • +3 votes

        If every credit application/query drops your rating to lower rating category, that would be disastrous.

        It would be, if credit scores actually mattered to banks :) it is true that every credit application does become an enquiry on your credit file, but that does not always mean disaster.

        This is just my experience, but major banks/issuers like ANZ, Westpac, Amex have not had a problem with my 8 enquiries and previous 790 credit score.

      •  

        Only a "full application" will have an impact.

        If you talk to a loans officer, they can look at your file & get a good idea of the likelihood of success.

        What will affect if the most is your income, current assets & repayments, whether you can service the loan, & defaults. Just don't go applying for lots of credit cards over a short period.

    • +10 votes

      Zero. Credit scores are made up numbers by companies like CreditSavvy who change their formulas as it suits them to scare consumers into going for garbage products they cop commission for. When I see a discussion like this on ozb I feel a little angry at these companies for making the OP feel worried!

      Major banks and lenders will use Dun & Bradstreet or Equifax to read your credit file (not credit score) and decide whether to lend to you based on their own criteria.

      For example, CommBank once told me they prefer I have not applied for credit in the last 6 months at the time of applying.

      • +2 votes

        Yep, trying to make it like the USA, we're not quite there yet.

      •  

        I had a credit score of 980 when underemployed for years.

        Just play their game. I use getcreditscore and the free credit reports. I've gone and had things removed from the report.

        •  

          me too mate, I have got 2 things removed and 1 more still pending. What happens is my credit card enquiries appear double or tripled on the report. However on my DnB or Equifax report they appear just fine.

          I have done a lengthy investigation with the Banks in question to prove these are wrong. I am keen to report CreditSavvy for doing this on purpose - just to lower my "score" and hope i'll get sucked into their products. Not sure who the appropriate regulator is though.

  • +2 votes

    Thanks for the explanation. BTW,getcreditscore is owned by Equifax.

    • +2 votes

      ah didn't know that. Still, I worked in commercial lending and have a friend in home lending, I have learnt that in both instances they read your credit file contents, not a score that another company has made.

      •  

        Do you know what sort of content details would rise a flag?!

        • +1 vote

          Defaults and/or bankruptcies

        • +1 vote

          @John Kimble: yeah exactly, and to a lesser extent late payments of like 2 weeks or more can be reported

        •  

          @R-Man: cheers thanks for that, does late payments fees in credit card are taken into account?

        • +1 vote

          @na8an: If reported to a credit reporting agency, yes that makes you look bad.

          You would have to do a credit report check from Dun and Bradstreet, or equifax, to see if that has happened.

          Not all late payments/mistakes are reported. I had a 2 week late payment on a westpac credit card, but they thankfully didnt report me (credit report still clean). It was only $26 though so perhaps they are cool with small amounts haha.

        • +1 vote

          @R-Man: me too got charged 15$ didn't come up on my creditsavvy report, I had to setup direct debit payment from then on. Thanks R-man.

  • +3 votes

    during the finance process of my mortgage they usually just ask me how many active cards I have - total up the $$$ and then ask me to cancel any to get my limit down to borrow what i want.
    I have only 'good' and i have never had any problems getting approval for loans.

  • -2 votes

    I just show my bank statement when getting pre-approved.

    All banks cares about is if you have a job that pays well and a big balance.

  •  

    100
    Points drop is fine

  •  

    Where did you get your credit score ?

  •  

    Does anyone know if late payments of utility bills appear on your credit report? Or is it only financial products like loans and credit cards that matter?

  •  

    my credit score dropped from 994 down to 620 after I applied for a $3000 personal loan even though I received the loan,it has just reached the new score of 724 in the last 15 months and all payments have been made on time and I have been paying over $3 each month

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