Ever since having a home loan, I’ve been struggling to get approved for a new credit card. I’ve just cancelled my Citibank $15k limit credit card, will this help and how long does it take for it to take affect on my credit report?
Will Closing Credit Cards Help with New Card Applications?
No Child Support on 29/07/2023 - 12:27
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There's no exact science on this, for us, because banks all have different risk assessments & models that are not made public. So we don't know any of their exact criteria and requirements, and there's so many other variables and factors to consider.
There's quite a few sources online that talk about this and seems mixed. Many of them suggest cancelling credit cards can actually hurt your credit score. Especially if it had a high credit limit. Maybe have a read around.
https://www.finder.com.au/will-cancelling-a-credit-card-affe…
I cancelled a $29k credit card and my credit score went up 7 points. (whee)
Unless your a business that's an insane limit.
It was a really old commbank card. I seem to remember every year they send a letter asking if you wanted to increase the credit limit. I think decades later, it got a bit of hand.
It's about credit serviceability, not your credit score.
Yes, and having less credit will make your serviceability better.
Yes. Since the start of the new credit reporting thing, I have not been able to get a new credit card eventhough I closed some. All rejected except for those bnpl stuff. They know now that my serviceability is in the red with only three fee free cards that I still have.
What's your gross income, total liabilities,age,mortgage as a % of earnings, etc.
How many times have you applied & been knocked back, and for what card limit?This is a how long is a piece of string thread >on steroids.
Just the existence of it tells me you need sound professional financial guidance
@No Child Support yes it will help by cancelling the old credit card first, as you are more serviceable now with less credit overhang when you apply for another card (especially since you have a mortgage, you are likely very close to your credit limit and the hiked interest rates do not help). I am not sure if you have been missing payments or applying too much (too many hard checks against your account isn't the best thing in a very short time period), or have had income changes, equity changes (based on your current home loan vs your actual house equity/value [interest rates have impacted this significantly]) and whatnot that may have impacted your serviceability, including any substantial changes to your spending habits or even hardship you may have encountered financially. Ive had multiple credit cards open at the same time but that's because I kind of know how much the bank will approve me credit wise, and I never max that out so I can hold multiple cards at the same time for point churning etc. Your 15k old credit card probably made you hard to service when the other banks did a hard credit check on you (as you may have been at your limit credit wise), but you should be ok now if nothing has changed income and liability wise since you applied last for that citibank card. Theres a tonne of variables but without the citibank card, you are less of a risk to the other lenders thats for sure, especially if you paid that down completely.
Normally takes a month for your credit report to refresh but the lenders should be able to see changes quicker, and sometimes the banks leave your credit card open for another month (even after you have formally closed it with the bank) just to ensure all charges against it are cleared off and other institutions arent attempting to charge it over that period (e.g you need to make an effort to clear your credit card details from all subscriptions etc [even if the card is somehow charged the 1month grace period allows you to pay that charge down anyway and you can remove your credit card details from the charger regardless]).
Applying for a new credit card and cancelling the old one will flunctuate your credit score but if you continue to pay off credit card in full every month your score actually goes back to baseline or increases slightly, Ive churned multiple cards already and this is my case anecdotally anyway.
Your best chance is to ask your bank that you have your mortgage with for a card.
Also, username checks out.
It depends. I would advise against closing your existing ones unless you can roughly calculate your serviceability. Especially with the home loan, even if you close all your cards, you may never get approved for the new one again. So a bird in the hand is worth two in the bush.
Why would you apply for a new card when you already have a high 15k one. Its effectively a loan. If it was about interest rate the od one should have gone first. I believe multiple rejections effects your score
My guess would be it's for the points for signing up to a new card. Not something I've ever been tempted to do. Probably wouldn't get approved due to only one income and a existing mortgage so why bother. Have my files card which garners good points returns, a zip and a afterpay account. More than enough. Plus I pay my card off every month so it's really about the rewards.
Im always surprised at the limits some people have on credit cards i know the banks are always pushing consumers to up there limits.
Churning until i got on ozbargain i always thoughts it was for people who can't manage money i didnt realise the benefits.
I'll stick to my one credit card I've had for approx 30 years with a 3k limit it works for me.
Which card is that?
I have just been told by Equifax that closed credit cards stay on your file for two years.
"While the account in question has been marked as closed, please note that this is not a basis for removal. This information will be automatically removed two (2) years from the date it was closed."
Woolworths Credit Cards have recently shut up shop, and are no longer in the business of providing credit cards. I managed to open a new Qantas Premier Platinum Mastercard account, to replace my old Woolworth Qantas Visa card, though not without a massive fight with NAB over it. A long story of no interest to readers here. However, it means that my credit file now shows I have three credit cards, when in actual fact I only have two, Amex and the new card. This is totally unfair, and possibly a reason why many people come unstuck with applying for credit.
Equifax are about to find out what it is like to get on the wrong side of me, and fail to fix blatantly wrong information such as this.
Not sure why you upset with Equifax but its normal.
My file shows 15 credit accounts out of which 3 are open. The closed accounts continue to drop as and when they hit their respective 2 year reporting mark.
Enquiries stay on the file for 5 years.
Assuming that you don't have any black marks against your name - missed payments or defaults - then yes closing a card will make it easier to get a new one.
This shouldn't really be a credit report thing, as you would have been asked what your existing credit card limits, etc were as part of the application. If your income isn't high enough to support the new card as well as your existing ones, then you're gonna be declined.
Of course, if your credit check comes back with a card that you haven't declared, it's not going to go down well.
My rule for churning is to wait for the official account closure letter on my old card before applying for the next. On the off chance that the old card provider is slack updating the credit bureaus, you have proof that the account has been closed. (And you can get the new guys handle fixing your record for you.)