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How much damage can credit card applications do to your credit file?

Discussion in 'Property Finance' started by mini2, 14th Jan, 2016.

  1. mini2

    mini2 Well-Known Member

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    There's some pretty outstanding credit card offers right now (ANZ's 75k QFF points, Amex's 82.5k QFF points) and tempted to do a hit and run (apply, spend what's required, get points and cancel card). How much damage can a number of CC applications in a short period of time do to your credit file?

    I don't want to inflict unnecessary damage to my file for the sake of couple of hundred bucks worth of points.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It depends what else is in your file but generally speaking don't do it. One may be fine but many more than that is going to do you more harm than good.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I've had clients declined because of applications for credit cards - too many enquiries in the last 6 months. But this will depend on if you use banks that credit score.
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    One or two cards might be ok.

    It also depends on the LVR of the loan you're looking to obtain. Multiple credit hits in a short period of time isn't good when applying for a loan that requires LMI.

    Those deals are good though! Just got an ANZ card with 75k points. Pity I won't be able to pay ATO bills on it any more :-(

    Cheers

    Jamie
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Basic rule of thumb would be 4 or less credit enquiries on your CRAA in the last 12 months is okay. More that that and you start to get into riskier territory.

    I've spoken with people who've played off one card company after another for the points. They get lots of free flights or upgrades. They can't qualify for a mortgage though.
     
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  6. mini2

    mini2 Well-Known Member

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    Haven't had a single card application in 4 years. In the last couple of years, there's a commercial hire purchase hit 15 months ago and couple of mortgage application hits. The next purchase may involve LMI and at 88% LVR. Both my Veda and Experian scores are in the 800ish range so shouldn't be too bad if I apply for 1-2 cards now?
     
  7. Redom

    Redom Mortgage Broker Business Member

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    Much of it will depend on your plans over the next 12 months - if you plan on applying for mortgage debt than its probably better to play it cautious and keep your lender options at a maximum. Too many can rule out lenders or trigger lower credit scores with them and make it more difficult to access funds.

    If you're not very active and don't plan on applying for finance, go for it. It won't do to much harm taking one or two of these offers on.
     
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    applying for and thence cancelling cards, and then doing a black box scored mortgage app doesnt look good

    tends to suggest one isnt being 100 % with current liabilities

    ta
    rolf
     
  9. mini2

    mini2 Well-Known Member

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    Thank you all - just got a confirmation from my credit union they don't have DUA in place and refer straight to QBE/Genworth. Will play it safe and not grab those free points :(
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    There would appear to be a critical piece of info

    LVR >80 is one of the heaviest loaded influencers in score, esp one you have base LVRs > 90

    ta
    rolf
     
  11. mini2

    mini2 Well-Known Member

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    Gonna keep it at 80% instead of trying to squeeze another 8% outta it. Could be for my own good...
     
  12. bob shovel

    bob shovel Well-Known Member

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    What about transferring credit cards to better rate? (apply new, transfer, cancel original) Is that counted as an app or is it best to leave it and just pay it off asap?
    Can you use equity loan to get rid of CC then repay yourself?
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes that will be a credit application.

    You can borrow to pay off a credit card. This is just a refinance and can have tax consequences with mixing loan purposes. See my tax tip.
     
  14. bob shovel

    bob shovel Well-Known Member

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    So it would be contaminated. Even one straight transfer gets messy?
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not necessarily. It depends
     
  16. bob shovel

    bob shovel Well-Known Member

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    Ok ill keep reading. I just want it gone :mad: (no more pies for a while)
     
  17. username0

    username0 Member

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    what do you mean by this? also if you were to take out a cc for a lrg amount over 9-12 months and then pay it back taking advantage of the 0% interest period. and then apply for a home loan would that be fine? (say in the 12 month period you have 2 hits 1 from a previous home loan application that went through and one from the cc application)

    Thanks, Username0