New credit reporting - Increase/improve score with credit cards

Discussion in 'Loans & Mortgage Brokers' started by FrivolousPanda, 17th May, 2018.

Join Australia's most dynamic and respected property investment community
  1. FrivolousPanda

    FrivolousPanda Well-Known Member

    Joined:
    21st Sep, 2016
    Posts:
    255
    Location:
    Sydney
    I assume some people have multiple credit cards like myself but usually only use one of them for most purchases. The other cards are for specific uses/reasons such as 28degrees for travel or having a card because it was free with mortgage package with a low limit.

    Would it be possible to improve or repair a credit score faster by using all credit cards every month, just put a small charge on the other cards and pay them on time every month? This way there will be more transactions of full, on-time payments on the credit file.

    Just a random thought and I am partly curious as to how the credit score black box works. Not suggesting people apply for credit cards solely for this purpose.
     
  2. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    You're better off getting rid of credit cards you don't need. A lender will take the credit card limit of all credit cards as a debt owing, even if you don't owe anything on them.
     
  3. oneone

    oneone Well-Known Member

    Joined:
    5th May, 2017
    Posts:
    160
    Location:
    NSW
    how does AMEX get accounted for ? They don't really have a limit
     
  4. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    I don't know how it works with Amex. However, Amex is not a credit card - it's a charge card which must be paid off every month.
     
  5. oneone

    oneone Well-Known Member

    Joined:
    5th May, 2017
    Posts:
    160
    Location:
    NSW
    oh i didn't know that, thanks. Have always treat the cards all the same - pay everything off in a month. I was wondering why my broker didn't say anything about the AMEX card
     
  6. FrivolousPanda

    FrivolousPanda Well-Known Member

    Joined:
    21st Sep, 2016
    Posts:
    255
    Location:
    Sydney
    But would getting rid of a credit card improve the credit score which has been shot to pieces maybe from unnecessary queries, especially if the additional credit cards have low limits?
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    With a high lvr loan , it may actually work against u

    ta
    rolf
     
  8. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    How do you mean Rolf?
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    If you have 7 credit enquiries in the last 18 mths for a 7 different cards, and only 2 appear on the application, many scoring systems will suggest one isnt telling the whole truth about current unsecured Limits OR the card providers have issued a bunch of declines

    typically where a client has a bunch of RECENT cards, we would look at reducing the limits to the min and have zero hard debt on them, when we are stuck with a lender that scores.

    ta
    rolf
     
  10. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,654
    Location:
    Newcastle
    I understand. Thanks for the explanation Rolf.
     
  11. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    If we knew it wouldn’t be a black box....

    Your credit report is one factor that makes up your credit score with a lender.

    Some credit reports have started putting a number on their reports. This is confusing and not relevant for mortgage purposes.

    The credit score/black box is determined by lots of things. The type of loan, p&i, inv, etc. The LVR, the work and residency history the age the asset position. And lastly their credit report.
    Mainly the number of enquiries.

    If I have a potential client who is a single male, first home owner, high lvr, new in the job with an asset position that includes a car loan a couple of credit cards and a personal loan, it’s very important to know how many credit enquiries he has made previously, as this might be a determining factor in approval with many lenders who credit score.
     
  12. Jobeki

    Jobeki Well-Known Member

    Joined:
    19th May, 2016
    Posts:
    63
    Location:
    Brisbane
    Amex is not a credit card per se but a credit card company. Within Amex their are normal credit cards (most of their offerings eg. Amex explorer, platinum edge) which have a credit limit just like other cards and their are charge cards (platinum charge card- personal or business; or centurion via invitation only...for high rollers ;). As to how the charge cards affect credit score not sure but at an annual fee of $1200 a year for the platinum charge (although minimum income requirement is ‘only’ 100k) and thousands more for the centurion they are not generally held by your average joe!