Applying for a CC help - I Thought I Was Savvy

Lyeahyeah on 03/10/2019 - 11:20

I have a handful of CCs at the moment, a Citibank Visa and an AMEX that i've held for a long time, as well as a more recent AMEX (18 months ago).

I thought I knew what I was doing, I have a good income (100k+), no debts, no current loans, expenses and spending isn't high, always pay off in full every month, getcreditscore & creditsavvy both say my score is in the excellent range.

So I thought I'd apply for the ANZ Travel Adventures card with the latest velocity offer. And got declined. Apparently my older cards have high credit limits, and even though I never in 10+ years have spent more than a few $k a month, 'I could'.

Unfortunately that's all they would tell me. Over in the US, having a low credit utilization ratio is a good thing (low spend out of possible spend), but here it's a bad thing? I was only asking for the minimum limit $6k. With all the new credit reporting I thought it'd be an easy approval.

Do I need to reduce all my high credit limits to ever have the chance of getting approved for a CC in future?

cheers
Yeahitsmesyd

Financial Credit Card

Comments

  • jimbobaus on 03/10/2019 - 11:30
    +15

    If you have lets say 3 credit cards with full clear balances they have to assess you on the full ammount
    so for example

    Card 1: $10,000 Limit, $10,000 Available
    Card 2: $5,000 Limit, $5,000 Available
    Card 3: $6,000 LImit, $6,000 Available

    Then when you apply for CARD 4 at lets say $5,000 they have to assess you on the FULL AMOUNT of credit you will have so 10+5+6+5
    As if they give you the $5000 card they have to assess as if you were to spend all the limits tomorrow and can you afford to repay all the debt if you did.
    New responsible lending laws passed a while back require them to assess you entire credit situation not just your income.

    Close cards you are not using, this will essentially put those funds back into you "sustainable credit" amount when being assessed for finance/cards etc

    • yeahyeah on 03/10/2019 - 12:29

      thanks, yeah that seems to be the case!

  • FirstWizard on 03/10/2019 - 11:34
    +1

    I believe thats the case.

    After comprehensive credit reporting was recently introduced, the banks can see the total credit limit you have during the credit check.
    Unfortunately, they don't report the credit utilisation here yet as they do in the US.

    I've heard each bank has some sort of criteria of what percentage of your income you're allowed to have as your total limit.

    • yeahyeah on 03/10/2019 - 12:30

      It'd be great to know what that criteria is.

      • Skramit on 03/10/2019 - 13:10

        That's up to each bank. There's never a one size fits all answer.

  • bohn on 03/10/2019 - 11:35
    +4

    Also, when going for a home loan, each $1,000 in credit card limit will reduce your borrowings by approx. $5,000.
    So using the example above, $21,000 in credit card limits, = $105,000 less borrowings approx.
    Source: went through the calcs with a nab loan fella not long ago.

    • yeahyeah on 03/10/2019 - 12:33

      Ouch, good to know!

  • resmansg on 03/10/2019 - 11:42

    Close the cards that you don’t use or lower their limits to minimum so that ANZ can approve for your new card as they all add up to your total credit limit. After a while, check your credit score report to see if those new credit limits have been updated or those credit accounts have been closed in the report (depending on what you did). Then you can apply for your new card. This happened to me, but I reapplied after two months and got approved.

    • yeahyeah on 03/10/2019 - 12:33

      Yeah I think i'll have to do that. I certainly don't need that high a credit limit, back in the day they'd offer to increase, i'd just accept, think it can't hurt. Now it can!

      • Soluble on 03/10/2019 - 16:38

        Yeah, but I wouldn't drop a card with a high limit these days if you can utilise it. They've added hoops to get limit increases.

  • bohn on 03/10/2019 - 11:50
    +3

    One trick you can do though (if you are in good standing), is apply for a few at once.
    The system isn't that quick to recognise that you applied for one very recently. And technically you are truthful if you say 'I only have this card' as the other ones haven't been approved/finalised/sent out/whatever yet.

    • yeahyeah on 03/10/2019 - 12:34

      cheers!

      • Mulga Bill on 03/10/2019 - 15:09

        even if this did work when you go to borrow again there will be questions asked as to why so many credit inquiries in a short time.

        • bohn on 03/10/2019 - 16:45

          Don't do it if you plan to borrow in next three months ;) be fine after that, I've been churning for years and have taken out mortgages.

  • lakes_8 on 03/10/2019 - 12:02

    Hopefully you're not paying annual fees on all of them..

    • yeahyeah on 03/10/2019 - 12:34

      Nah and even the ones that I do pay a fee for, I'm getting more value out of it than i'm paying.

  • Diji1 on 03/10/2019 - 12:22
    -8

    The savvy don't participate in spending incentive schemes because they work.

    But of course we live in a nation of delusional people thinking that they're earning money by losing it.

    • yeahyeah on 03/10/2019 - 12:35
      +4

      Honey, don't let the door hit you on your way out

    • spiff on 03/10/2019 - 13:52
      +2

      It's easy to call people delusional but the reality is you're too lazy to figure out how you can gain value from it.

      It depends whether or not you want to experience business/first class flights. If you're not interested in that then yes you are "losing" money. If you are, then the effort and lower cost relative to the cash price of the airfare is well worth it.

      On a smaller scale, if you're diligent in not spending more than you would normally, then earning points which exceed the value of the card's annual fee is very easy.

  • blueyez on 03/10/2019 - 12:26

    I would ask them if they are able to review it - otherwise cancel or reduce limits on the cards to see if that improves your chances.

    Before applying for the ANZ card I already had 2-3 cards (I keep the limits to 3k or under, exception is one of them is 6k) on a lower income.

  • knobbs on 03/10/2019 - 16:17
    +1

    My last citi application they called me and asked if I have still have the CCs I put on my application, 'yes', will you be closing them if you get this card, 'umm yeah'. Alright I will take $Xk off of that credit limit.

    Maybe try telling them you will cancel the card if you get this one? Seemed to work for citi lel

    • coco1458 on 05/10/2019 - 11:57

      Chances are that if you apply for Citi again and they see you haven't closed the card, you may get declined based on not closing the card as previously stated

  • [Deactivated] on 03/10/2019 - 17:23

    Huh..just close your credit cards that you are not using. It doesn't matter if your utilisation is close to zero there is still liability on you. You should be able to service 2.5-3% of your credit limits monthly with 30% of your net income (no financial planner here but just my thinking)

  • Lunchguy on 08/10/2019 - 16:47

    I applied for the same card with ANZ and got rejected. The first time was because I was mid refinancing my home loan (to ANZ) and the double counted the mortgage.

    No idea why it got rejected the second time I only have one credit card, high income and moderate expenses.

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