Att: Brokers! Huge Qantas FF point offers on cards, borrowing ability impact?

Discussion in 'Innovative Techniques' started by DavidMc, 15th May, 2015.

  1. DavidMc

    DavidMc Member

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    Dear Mortgage Brokers on the forum,

    I've notice some good offers on Qantas points for signing up to a new credit card.

    If I were to sign up to one (or more) of these, with the minimum limit possible, and cancel it as soon as I get the points, how bad would the impact be on my credit file under the new way they log these entries now?

    The points would be nice but I'm not going to jeopardise my borrowing ability to get them.

    David.
     
  2. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    A single credit card enquiry shouldn't have an impact.

    The credit card itself will only have an impact on your borrowing capacity if you decide to keep it. It's generally 3% of the limit applied as a monthly liability (so $150 p.w on a $5k card).

    Cheers

    Jamie
     
  3. DavidMc

    DavidMc Member

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    Thanks Jamie. What about 4? My understanding is under the old system you'd get an entry like:

    'DavidMc applied for credit card at ABC Bank on 15/5/15'
    'DavidMc applied for credit card at DEF Bank on 16/5/15'
    'DavidMc applied for credit card at GHI Bank on 17/5/15'
    'DavidMc applied for credit card at JKL Bank on 18/5/15'

    And therefore it could be interpreted that I was denied credit 3 or 4 times and therefore have a loan denied. This happened to a friend at work, he couldn't switch Energy providers due to 'unspecific credit worthiness fail' even though he's loaded with a perfect repayment history!

    My understanding is the new system will have the limits and if the application was successful or not (could be wrong here).

    If I apply for (and get) 3 or 4 cards under the new system, minimal amounts and then cancel them would it have no/little impact?
     
  4. bobby85

    bobby85 Member

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    So that's the calculation! Thanks for the tip.
    I happily accepted my 15000 visa signature card when they offered!
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Jamie's estimate is a little off, it should be $150 / month, not per week for a $5k card.

    As a rule of thumb, a credit card impacts your borrowing capacity by about 3-4 times the limit (depending on the lenders policies). A $15k credit card might reduce your borrowing capacity by as much as $60,000.

    If you've got a card with a $5k limit, this probably isn't going to affect you (you're already pushing hard if it comes down to $20k). A bunch of cards totalling $40k may become a problem though.



    Dave: The proposal of applying for a bunch of cards is a risky one. The systems that report if you actually took the card or not or it was denied are already in place, but I'm seeing little evidence at this point that this detail of data is being reported yet and even less evidence that it's actually being used. 4 card applications like that are probably going to get you in hot water on your next legitimate application. Even when the systems are fully in place, I wouldn't be trying this.