Good or Bad credit rating?

[Ricko]

Hello Everyone! long time reader first time poster

Just asking a question about credit ratings and histories. I am a student and am looking to go overseas next year on exchange, and was looking at the Wizard Clear Advantage credit card, no international fees etc.

I applied August 06 for the card, was declined, which was fair enough, no credit history, minimal income at that point. I then obtained a student Mastercard through Commonweath, but at the same time was approved for an Earth+ with westpac, which is what card i use everyday.

I never used my comm bank card so i cancelled it abuot 2 weeks ago, and then decided to reapply for the Wizard card, and found out i was declined again. So 13 months, 4 credit applications on my file.

I always pay my account off each month in full, never paid a cent in interest. I understand since my limit on my westpac may be the reason why GE's declined me, but would it be wise not to apply again for the wizard card for a while (or ever), even if over the Dec-JAN break i'll be earning twice as much? I asked for my credit file from Baycorp and just shows 4 applications for credit.

Cheers, Ricko

 

[Dave Noble]

Different companies have different criteria for determining whether to extend credit. If your credit file is clean then it suggests that other aspects of the information you provided means that you are not within their target clientele

Given that they have declined you, I would wait until (a) a resonable time passes before re-applying and (b) that your circumstances change such that you are likely to be approved

Dave

 

[NM]

Your credit reference (e.g. Baycorp) will not show the fact that you always pay your credit card bills on time and don't pay interest. It only shows credit applications and defaults. I think you would need to be in fairly serious default to get a reference hot for it, such as at least 3 months in default.

The credit reference also does not show that you have closed a credit account (such as your Comm Bank card), nor if you reduce a credit limit.

When you apply for credit, the credit provider considers a range of information when making a determination about your risk, and each provider has their own rules and formulae for determining this. The credit reference from Baycorp is just one factor, and it is generally used to determine if you are regularly seeking new sources of credit which could be considered a risk factor.

Most credit providers put much more weight behind the financial details you tell them on te application form. They are most concerned with your ability to pay them what you owe them. They see any existing credit facility (such as a credit card, loan etc) as a debt. Some use the total credit limit of those existing facilities as your current debt level, while some use the current balance as the current debt level.

So showing on the application form that you have lots of existing credit facilities can work against you unless you have the income to cover that debt in addition to the credit limit you are now seeking. So it is generally best to show that you have ample income (and they normally want to verify income claims by seeking payslips or contacting your employer, so casual holiday work is not going to help much here) and minimal potential debt.

Of course you must be honest in your declaration on the form. So that may mean you need to cancel other cards or reduce their credit limit down to something very low. Neither of those activities will appear on your Baycorp reference, but would mean you can honestly complete the application form in a manner that shows you have very little current potential debt.

 

[bambbbam2]

It is a difficult situation. There just are no "hard-and-fast" rules. Every credit provider uses their own formulas to decide if, and how much, credit they will offer an applicant.

These internal formulas are also strictly guarded, and even if you obtained one they are a changing target. They may be based on gender, age, income, residential status, market segmentation etc.

NM is completely correct - your file only shows applications (and sometimes the applications have a $ figure, sometimes $1, sometimes the credit limit, and whether you have any defaults (>60 days) or judgments against you.

Vega Advantage (BayCorp) have been actively lobbying for a newer system, similar to the US system where you have a "credit score" but this has not yet been approved.

 

[Optics]

Hello Everyone! long time reader first time poster

Just asking a question about credit ratings and histories. I am a student and am looking to go overseas next year on exchange, and was looking at the Wizard Clear Advantage credit card, no international fees etc.

I applied August 06 for the card, was declined, which was fair enough, no credit history, minimal income at that point. I then obtained a student Mastercard through Commonweath, but at the same time was approved for an Earth+ with westpac, which is what card i use everyday.

I never used my comm bank card so i cancelled it abuot 2 weeks ago, and then decided to reapply for the Wizard card, and found out i was declined again. So 13 months, 4 credit applications on my file.

I always pay my account off each month in full, never paid a cent in interest. I understand since my limit on my westpac may be the reason why GE's declined me, but would it be wise not to apply again for the wizard card for a while (or ever), even if over the Dec-JAN break i'll be earning twice as much? I asked for my credit file from Baycorp and just shows 4 applications for credit.

Cheers, Ricko

The Wizard Clear Advantage is a good card when travelling, so it is worthwhile persisting. I would suggest you ring them and ask why they have declined your application. It may be that you can explain your situation better in a conversation. It may not change anything, but is worth a try.

 

[Dave Noble]

Vega Advantage (BayCorp) have been actively lobbying for a newer system, similar to the US system where you have a "credit score" but this has not yet been approved.

Fortunately; I dislike the US and UK approach of storing all sorts of information on an ongoing basis extremely.

Dave

 

[Fifa]

I recently got a Wizard Clear Advantage Mastercard and suggested my 19 year old son also apply for one. (We are travelling overseas together next month)

It was his first cc application, he has no debt, is employed in a well paid full-time position (and is also at uni) and has $$$ in the bank.

After completing the on-line application the message he immediately received said he was unsuccessful as he has no credit history! How does a young person get a credit history?

I phoned Wizard on his behalf but got nowhere (the Indian gentleman I spoke to said if his on-line application was declined there was nothing they could do but he may have better luck at a bank!) so I suggested my son write to Wizard setting out all his particulars and asking for his application to be reviewed. He sent the letter over a month ago and still has had no reply.

What a shame - I imagine Wizard has now lost a potential customer for a home loan and future credit card!

 

[Dave Noble]

After completing the on-line application the message he immediately received said he was unsuccessful as he has no credit history! How does a young person get a credit history?

He does now he has made that application since , if he didn't have a record with Voca before, he does now

What a shame - I imagine Wizard has now lost a potential customer for a home loan and future credit card!

I can't see why it would really be likely to make a difference in that area in the future; I wouldn't have thought that most people would view being declined for a cc once as being a reason to never use that company nor try again when personal circumstances are different

Debt companies do have to make an assessment on whether giving out a debt card is a good risk and decide whether the applicant fits within their desired criteria

Dave

 

[oz_mark]

Vega Advantage (BayCorp)

It's actually Veda Advantage these days, (not sure how Baycorp fits in these days).

 

[Mal]

How does a young person get a credit history?

Some of the 'big banks' will give out a $500 visa/mc to just about anyone who earns an ok salary and has some savings history with that bank.

Store cards used to have lower credit checking than other cards, but not sure what happens now that most are managed by GE.

 

[oz_mark]

Some of the 'big banks' will give out a $500 visa/mc to just about anyone who earns an ok salary and has some savings history with that bank.

Store cards used to have lower credit checking than other cards, but not sure what happens now that most are managed by GE.

In my experience, GE are a bit tougher than when they were run by stores. Certainly some people I know have been rejected for GE cards, but then subsequently got cards issued by their own bank.

 

[JohnK]

I wouldn't put too much emphasis on what information is stored at Veda Advantage (Baycorp). I actually don't think this makes much difference to most credit applications unless you have had problems like defaulting on credit cards or loans. By the same token if you are young I wouldn't want to see too many applications for credit.

I have just applied for another 2 credit cards and by the looks of things I have been approved for both. I have also lost track of how may cards I have in my possession. :shock:

 

[simongr]

I remember when I was starting out at Uni the banks were happy to give students cards on the basis of hooking them whilst young and keeping them as customers for life (like the Jesuits ). I guess that is the way to build up a credit history.

When I moved to Oz I started from scrtach and didnt get a credit card (except a Corporate Diners card) for the first 5 years - currently now just have my CC linked to my bank (well my wife's bank) and my Amex Gold Charge. I was actually knocked back for a personal Diners card at the same time I applied for my Amex gold even though I had been a customer of Diners (although it was a Corporate Card it was a personal liability card) for 6 years...

When I first moved here I was able to get a buyers choice credit line (useful for Bing Lee interest free credit deals) quite easily in my name even though I wasnt a permanent resident.

 

[QF WP]

It's actually Veda Advantage these days, (not sure how Baycorp fits in these days).

Baycorp advantage changed it's name to Veda Advantage, after a hostile take-over that commenced in July 2005 was successful:

Listed cashbox Allco Equity Partners has made its first move, acquiring 17 per cent of credit records and debt collection company Baycorp Advantage and making a hostile bid for half of the rest, in a deal worth up to $470 million...
Allco Equity springs Baycorp bid - Business - Business - smh.com.au

 

[oz_mark]

Baycorp advantage changed it's name to Veda Advantage, after a hostile take-over that commenced in July 2005 was successful:

Listed cashbox Allco Equity Partners has made its first move, acquiring 17 per cent of credit records and debt collection company Baycorp Advantage and making a hostile bid for half of the rest, in a deal worth up to $470 million...
Allco Equity springs Baycorp bid - Business - Business - smh.com.au

Presumably then, what is now Baycorp was something that was split of from the bit that became Veda Advantage.

 

[Mrmaxwell]

Australia's credit rating system is a joke. I implore anyone who thinks that the UK/US credit score method is floored to look closer.

Currently in Australia if a young person defaults on a $80 phone bill and this is listed they will be refused any line of credit for 5 years no questions asked - this is wrong. Secondly, if you apply for a line of credit - say ANZ Mastercard - this will also be listed on your file as 'ANZ Banking Corp xx/xx/07' for 5 years with no information on whether or not you actually received card - how stupid is that? The more 'credit enquiries' you have listed on your file the less attractive your file becomes! Ridiculous. Finally, you have NO SAY on what goes on your file. A company makes a mistake? Tough. Someone steals your details? Oh well. The system is a joke and needs to be overhauled.

A true credit rating system must take into account the whole picture of a persons finances - positive & negative, and Australia is one of the few developed economies of the world to have negative-geared credit reporting rather than a true credit rating system.

Ok end of rant

 

[one9]

Australia's credit rating system is a joke. I implore anyone who thinks that the UK/US credit score method is floored to look closer.

Currently in Australia if a young person defaults on a $80 phone bill and this is listed they will be refused any line of credit for 5 years no questions asked - this is wrong. Secondly, if you apply for a line of credit - say ANZ Mastercard - this will also be listed on your file as 'ANZ Banking Corp xx/xx/07' for 5 years with no information on whether or not you actually received card - how stupid is that? The more 'credit enquiries' you have listed on your file the less attractive your file becomes! Ridiculous. Finally, you have NO SAY on what goes on your file. A company makes a mistake? Tough. Someone steals your details? Oh well. The system is a joke and needs to be overhauled.

A true credit rating system must take into account the whole picture of a persons finances - positive & negative, and Australia is one of the few developed economies of the world to have negative-geared credit reporting rather than a true credit rating system.

Ok end of rant

Sounds like you talk from experience?

 

[Evan]

Sounds like you talk from experience?

Well i know i can speak from expereince, i have to agree what good is listing a credit enquiry and no further infomation, just moving house generates enquirys from phone/power/gas/water etc and then some card company thinks you should not have a card because of that ?

Early on i had lots of enquiries and no negative info but i was rejected by Amex, i even pointed out to them and could explain every inquiry and provide proof of payment for all loans (car) etc and still no go.

But what was not on file was the paying of loans early, but then again credit companys don't like that as they make less money.

E

 

[Dave Noble]

Australia's credit rating system is a joke. I implore anyone who thinks that the UK/US credit score method is floored to look closer.

Currently in Australia if a young person defaults on a $80 phone bill and this is listed they will be refused any line of credit for 5 years no questions asked - this is wrong. Secondly, if you apply for a line of credit - say ANZ Mastercard - this will also be listed on your file as 'ANZ Banking Corp xx/xx/07' for 5 years with no information on whether or not you actually received card - how stupid is that? The more 'credit enquiries' you have listed on your file the less attractive your file becomes! :

I thought that the limit now for registering a phone was $100

Even in the UK, having the default has the same effect in that few places would then consider someone for credit, the difference being that these credit comapnies get to maintain lots of information that is just wrong for them to have

The more credit enquiries that take place the more iffy things look

The Australian system as is , is imo far better than the awful setup of the UK

Dave

 

[straitman]

Australia's credit rating system is a joke. I implore anyone who thinks that the UK/US credit score method is floored to look closer.

Currently in Australia if a young person defaults on a $80 phone bill and this is listed they will be refused any line of credit for 5 years no questions asked - this is wrong. Secondly, if you apply for a line of credit - say ANZ Mastercard - this will also be listed on your file as 'ANZ Banking Corp xx/xx/07' for 5 years with no information on whether or not you actually received card - how stupid is that? The more 'credit enquiries' you have listed on your file the less attractive your file becomes! Ridiculous. Finally, you have NO SAY on what goes on your file. A company makes a mistake? Tough. Someone steals your details? Oh well. The system is a joke and needs to be overhauled.

A true credit rating system must take into account the whole picture of a persons finances - positive & negative, and Australia is one of the few developed economies of the world to have negative-geared credit reporting rather than a true credit rating system.

Ok end of rant

In Oz the availability is there to challenge any incorrect or incomplete info on your report. I know because I have done so and had the error corrected. From this perspective the Oz system does infact work well though I believe that there are some glaring gaps.