Disclosing credit cards

I’m currently applying for a new investment property loan. I have a credit card that has zero balance because I don’t use it, I wasn’t planning to disclose it for that reason. I do plan to disclose the ones I use however.

Can banks find out what credit cards you have during the application process?

 

Yes. It's possible they will know. But even if they couldn't find out, you shouldn't NOT disclose anything in your application. It is considered credit fraud to purposely ommit financial information such as credit card limits in a credit application.

If you don't use the credit card, then it's simple, cancel it. Then you can confidently declare that you have one less than you do now.

In addition, your broker should be able to advise how significant this credit card limit will impact the overall application. If this credit card will break the deal, more the reason NOT to hide it because it would mean you cannot afford the loan. If it doesn't break the deal, there is no harm in keeping it but making sure you declare it.

 

Thank you but it's not as simple as cancelling it then re-applying later. I'm an expat and would ideally like to hold onto the card in case I have use for it later, rules around expat loans/credit are increasingly tightening. Getting a local credit card is also difficult. Hence why I was thinking of how to avoid this.

 

Then you need to consider how the credit limit on the card will impact the application. Lenders usually take about 3% of the limit as a monthly commitment. So for example if the limit is $5,000 then $150 is the monthly commitment. Once again, if you can service the loan with the monthly credit card commitment as calculated by the lender then you shouldn't have an issue.

If you don't service with it, you either cannot proceed with the loan or you will have to cancel it. Another option is you could possibly reduce the limit to the minimum seeing as you don't use it anyway. This will allow you to keep it.

 

Disclose it then!

 

Get a free copy of your credit file and see what banks have reported your facilities with them. You’ll need to disclose these at least. I’m not suggesting you commit credit fraud.

 

In today's credit market is better to disclose rather than not, if you don't disclose and the bank finds out they can decline your loan application and potentially black list you depands on how serious was the fraud. And banks DO talk to each other!

 

Not legally they don't.
But I have heard of informal illegal disclosure happening. But not for credit card non disclosure.

My experience with clients that haven't disclosed is that if the bank finds out they take no action other than taking it into account.

Had one recently where a credit card with the bank to which we applied with was not disclosed.

 

The comprehensive credit reporting is already live with all unsecured debt ie credit cards and unsecured personal loan.

There are incidents where an applicant got declined from their bank and try to refinance and when the other bank put in a discharge authority the main bank contact the refinancing bank about the potential fraud. So yes banks do talk to each other when it comes to fraud.

 

I’m pretty sure lenders consent forms talk about sharing data, ‘bankers opinion’?
And your lucky so far, I’ve had loans declined for non disclosure. Depends on the bank and the credit score of the appllicant I’d say.

 

Yep - they can usually see it on your credit file.

You need to disclose all credit limits.

Cheers

Jamie

 

Disclose it or close it.

 

Only with limited parties such as related entities and mortgage insurers.

 

you could reduce the Credit Card limit to minimise the impact on your servicing, and disclose it.

or cancel it.

really no other choice there.

 

Some banks let you temporarily reduce your credit limit - say if you were traveling for example. Once the temporary limit is in affect, disclose that limit - which is true.

 

Westpac found out Gomastercard on my name for Harvey Norman purchases, and they would look at the card limit, not actual balance in assessing borrowing capacity.

 

Keep in mind credit card companies do a credit check every 12 months or so. Even if you had taken the card 5+ years ago it could still appear on your credit file.

 

I just checked my credit report and my credit card had 2 credit enquiries in relation to my card 18 months apart, even though I have held it more than 5 years.

 

Which Bank is this? Westpac, NAB don't seem to be doing this to my file.

 

Mine is a coles credit card. Banks probably wouldn't if the card is part of a package - as they hold a mortgage over real property which secures the credit card debt.

I recall years ago I had a client declined with Westpac because she had something like 18 credit card enqiries over 2 years. It automatically failed the credit scoring. It was her evil credit card company who had an automated credit check on - HSBC I think.