Credit Enquiries

[albanga]

Greetings Brokers,
A lot is often said on these forums about credit enquiries. Whilst I understand how they can affect your ability to gain finance, little has been mentioned as to how exactly in regards to the number, frequency, with whom the enquiry was with.etc

I also understand each lender reviews this differently but I think the General SS community would benefit from a breakdown and general experience in this area.

So things I think would be beneficial to know would be:
How many enquiries would raise alarms. Subsequently what about if there were lots but not for some time.

What about if someone only had say 5 but all within a short period, say 1 month.

Does the credit provider with who the enquiry was made have an affect? For example a few enquiries with cash convertors would be worse than a credit enquiry with a big 4.

This is just a few things but obviously someone with experience would be able to shed more an insight.

 

[Terry_w]

These days no one knows. Credit reporting has recently changed and it is a great mystery how it all works now.

 

[Jamie M]

There's no set rule.

It all comes down to how individual lenders credit score applications and the weight they put on active credit files.

It will also come down to other factors such as the LVR.

If you were in need of a 90% lend for instance - then 5 hits in a month would be a concern. However - you can mitigate that by using a lender that doesn't credit score and has the ability to approve LMI in house. Lenders such as AMP, who fit this description, may still approve the deal if there's a good reason behind the credit file hits. Other lenders, such as Nab, would probably auto decline the deal due to the high number of recent credit file hits.

But then again.....as Terry mentioned, the changes in credit reporting are starting to come into play which adds even more unknowns.

Cheers

Jamie

 

[Peter_Tersteeg]

The number of credit equiries has an effect on your credit score. Lots of other data points also have an effect. This includes the history of where you live, your job type and history, level of debt, LVR, location of property, lots and lots of other data points which you'd never think of.

The rules around this change depending on the appetite of the lender, they change from one lender to another. The credit assessors in the bank don't know the rules, let alone the brokers and branch staff. It's deliberately kept secret.

The best advice anyone can give around this is to try to make yourself look stable. Only apply for credit when you've got a reason, not on a whim. Try not to change jobs too often, be upfront about everything.

I do know that more than about 4 credit enquiries within a few months looks bad, but I can't tell you how bad under what circumstances. Just do the best you can.

 

[Terry_w]

A few weeks ago I checked my credit score, then applied for a credit card and then checked it again and my score had gone up. i.e. improved. Doesn't really make sense that getting a credit card can give a person a better score.

 

[albanga]

Thanks for all the great detailed replies.
Terry that's very interesting your score actually improved based upon obtaining more credit.

 

[Terry_w]

Try https://www.creditsavvy.com.au/Account/Login

This allows you to see your credit file live and it will email you monthly reminders to check your score. Mine has changed again - down slightly now as some old enquiries dropped off.

 

[DaveM]

Try https://www.creditsavvy.com.au/Account/Login

This allows you to see your credit file live and it will email you monthly reminders to check your score. Mine has changed again - down slightly now as some old enquiries dropped off.

Does this touch your file at all?

 

[Terry_w]

Does this touch your file at all?

Its not a credit enquiry. I imagine it appears as a self enquiry - it is run by the Veda people I think.

 

[gradeng]

Try https://www.creditsavvy.com.au/Account/Login

This allows you to see your credit file live and it will email you monthly reminders to check your score. Mine has changed again - down slightly now as some old enquiries dropped off.

Thanks for the link Terry - very handy.

 

[Rickduff]

Thank you Terry for the link.

I just had a look at mine and noticed I am 20 points under an excellent credit rating.
Is there anything I can do to bump up into the next category?
I did have 3 enquiries, could this be causing a lower rating?

 

[Terry_w]

Is there anything I can do to bump up into the next category?

Get a credit card = This took me up about 50 points. But not sure what it would affect you.

Why don't we all monitor our reports and report back in on changes to our scores and what possibly caused this change.

 

[Peter_Tersteeg]

Given that lenders have their own credit scoring mechanism which incorporates significantly more data that appears on your credit report, I don't think it would be prudent to rely on Veda to provide you with your credit score. It may be an indicator, but the number on your Veda report isn't the one that lenders use.

 

[Terry_w]

One of my clients was recently rejected by Westpac because of the credit score - otherwise good credit history and the score wasn't bad either. The credit people could not tell us what was wrong, but they kept saying they were relying solely on the credit score as supplied by Veda.

But since then we have 2 more approvals from different lenders, so this may be a peculiar trait of Westpac - 80% LVR to from memory.

 

[Peter_Tersteeg]

Think about it logically. Your Veda report doesn't know if you're buying in a Cat 1 or Cat 5 location. It doesn't know about the LVR (on anything in a borrowers portfolio). It doesn't even know the address of existing properties. It doesn't know how much super you've got, your income or your cash position.

All of this information is in your finance application. Of course lenders supplement the Veda score with other data. Lenders also have a lot more information if you've banked with them previously. They know your history on repayments, especially on things not reported to Veda. Your credit card might be overdrawn 3 times in the last 6 months. This probably won't be reported to Veda, but you'll probably have trouble getting a 90% loan from the same lender that issued that card.