Credit Scoring

which banks use equifax or similar credit scoring?

which ones use their own internal methods when deciding?

particularly interested in

ANZ
Citibank
HSBC
CBA
Macquarie
NAB
Westpac

Thanks!

 

They all run a credit report, which shows your past credit enquiries defaults if any and to some extent the conduct of your existing credit. You can run your own by contacting equfax.

Credit scoring is diferent.

It’s an algorithm that many lenders use to determine if you are a good risk. Things like nett asset position, age, length and type of employment, lots of things go into this algorithm.
No one knows exactly how the algorithm works and worse each lender is slightly diferent and they can change them, putting more weight on diferent factors as time passes.

 

For Credit Reports, majority of lenders use Equifax or Dun & Bradstreet, some use both.
As mentioned above the credit scoring is different for each lender.
AMP does not credit score, there may be others as well but that's one lender I know for sure doesn't.

 

Any particular reason why you're interested in those lenders?

Cheers

Jamie

 

Even with your credit report and your 'credit score', that's not necessarily how a lender will view it although it is a good indication.

Lenders have their own metrics, which they do constantly adjust. The metrics are not disclosed to anyone you'd ever deal with (not even the banks own staff). It takes into account a lot more info than your credit report from Equifax.

 

Big banks use computerised credit scoring systems that assess deals that you need to pass (NAB, ANZ, CBA, Westpac from the above list). Arrears (with the lender), overdrawn amounts (with the lender), defaults with any lender, etc can all trip you up here, along with other factors in the deal that go into a relatively holisitic assessment (e.g. lvr, age, deal parameters, etc).

In general, all lenders will view/see the activity on your credit history though. Those that don't use computerised systems that you need to pass, will have manual assessment to determine credit eligibility.

 

How do lenders treat salary packaging? Its a discretionary option for me as an employee, but broker is telling me the banks can’t understand it.

I work for an NFP which is a rebatable employer. I package school fees, have a novated lease and an associate lease for mine and my wife’s car (use the employee contribution method). Car under associate lease is owned outright by my wife.

I save tax, and GST this way - but may have penalised my borrowing capacity. Thoughts?

 

@Hamish Blair your novated lease will be a disaster for your serviceability. Hard to comment without knowing specifics about your wife's car, but it's either going to be neutral or worse on your serviceability.

NFP tax free income is either neutral or helps serviceability a little, but it requires a little extra paperwork.

 

The car lease with no debt may be good to you, but its very hard to convince banks to accept this. We've had a recent case with Westpac - literally took like 5 go's to have them understand and accept the arrangement and not include the expense. It's too difficult to sell to accurately and reliably include in any planning, so assume the expense will reduce your borrowing power.

As a guide, 1000p/m expense will drop your borrowing power for your next purchase by ~$150k.

 

Hmm. Paid cash for the car and everything. If my wife and I apply (and she shows the income from the associate lease) will that help?

[sorry to hijack the thread]

 

Really need to see the paperwork to give you any sort of reasonable answer on that, but the best outcome is going to be neutral, it only gets worse from there...

Unfortunately lending logic and tax logic are often mutually exclusive.

 

Do banks really care if you have too many credit card applications/inquiries but never had arrears/defaults and you’re actually liquid ie a lot of cash sitting in the offset?

I may have been obtaining too many credit cards to get free Qantas points, Velocity points, Shopping vouchers, Gift cards, 0% Balance Transfers etc etc essentially to take advantage of free stuff when there are promos. But I never really have a spending problem or anything like that, and I actually save like 2/3 of my takehome pay every month.

 

Yes most lenders do care. For some the amount of enquiries affects your credit score and it’s possible you will be declined before it reaches an assessor. For others that don’t credit score or who have a less strict scoring system, you may need to explain/verify your current cards to the assessor.
Note also having funds in offset doesn’t help with approval. Assessors aren’t concerned how good you are with money beyond the fact your overall asset position matches your demographic and you spend less than you earn each month.

 

Some lenders are very strict on this (or at least their computers are)

My credit repair lawyers won't get your credit report for you, even though that would make their lives easier, as that counts as a query on their file.

If you have authorised the query then it can't come off your report either. My guys do come across files where permission hasn't been given or where permission for one query was given but numerous were made. Those can come off.

 

Better keep copies of closure letters you receive when you close the CC accounts you no longer use. I was asked for these when they saw my credit inquiries on my credit file, for cards that are no longer active.

 

^me lucky indeed. thankfully the "system" was controlled by a thinking human who then started asking me for evidence of closed accounts etc etc, then it was approved.

 

How can a person clean up their credit history if credit history checks and enquiries are even considered negatively. Applying for a credit card is even considered negatively, even though it may lead to nothing or no credit card was taken. You mortgage brokers must see its bad for your business to have what are ghost issues causing peoples credit scores to become negative. Its crazy, get together and get the MPs to change the system so that it becomes simple and considers only actual credit held and nothing else to confuse the matter.