Amex Application: Is 1xCC better than NO CCs

[SOPOOR]

Question: does amex/CC companies see having no credit cards as a negative?
Going to reapply for amex shortly, ive cancelled my last single CC to avoid the fee, and to wait a month until it drops off credit and then apply for amex

a bit late for my situation, but, was thinking, should i have applied for the amex whilst the other one was active

 

[Human]

It really is very difficult, if not impossible, to be certain. Every CC company is different and each one applies different criteria, which they keep very secret.

My “informed guess” of an answer is that if you don’t currently have any CC, the companies including AmEx will look at your credit score and credit records via companies such as Experian. A low credit score, and no record of debts and repayments, would be more of a negative than not having any credit cards at this exact moment.

Just my guess, but hopefully not a totally uninformed guess…

 

[andye]

Question: does amex/CC companies see having no credit cards as a negative?
Going to reapply for amex shortly, ive cancelled my last single CC to avoid the fee, and to wait a month until it drops off credit and then apply for amex

a bit late for my situation, but, was thinking, should i have applied for the amex whilst the other one was active

I'm pretty sure none.

US credit scores have a component of length of credit and the score is very important in acceptance. In Australia, credit scores don't have a length of credit component and the actual score has little relevance.

Here, acceptance is largely based on regular earned income vs debt exposure, expenses, defaults. Assets also seem to be of minimal importance

 

[Peregrine]

My recent experience apply for Amex and sensing fro CSO what they were looking for:
- Any negative credit events? Defaults etc
- Ability to service, taking accout of -- income being received, expenses (dependents, other credit commitments), allowance for living expenses

Income from investment assets is disregarded.

 

[0x012fd0aa]

I think it should be fine, yet they may approve you a lower than expected credit limit...

I am no expert but i do see an "age of credit file" saying 6 years + on my credit report...

 

[burneracc]

amex def prefer a credit history with 1 card or so in my experience. got declined by them, so opened up an alternative card (some cheap commbank thing), used it and waited 6 months then amex approved me on my next app. this was following the advice that they gave me too - that they prefer to see history of using a CC before they approve.

 

[N0mad]

Amex has also been declining applications where it feels the client is a churner, so really depends if that cancellation could paint that view of you.

 

[Catweazle]

In other news, if I have a QF Amex and have had that card for a number of consecutive years now without cancelling it, will I still be eligible for bonus HH points if I apply for the Hilton Honors Amex card too?

You may not be eligible to receive a welcome offer if you have or have had this Card, the Hilton Honors Amex Ascend Card or previous versions of these Cards. You also may not be eligible to receive a welcome offer based on various factors, such as your history with credit card balance transfers, your history as an American Express Card Member, the number of credit cards that you have opened and closed and other factors. If you are not eligible for a welcome offer, we will notify you prior to processing your application so you have the option to withdraw your application.

Emphasis added.

 

[moa999]

The biggest issue will be what is the limit is on that card and how that impacts serviceability.

 

[MG1]

Here, acceptance is largely based on regular earned income vs debt exposure, expenses, defaults. Assets also seem to be of minimal importance

Here, acceptance is largely based on regular earned income vs debt exposure, expenses, defaults. Assets also seem to be of minimal importance

Is there a general "rule of thumb" that we should look at when considering the limit that we're exposed to? I remember seeing somewhere that if your total credit limit (across multiple cards) is >1/3 of your income, then you might not have luck opening a new card?
I'd like to apply for another Amex card and would like to make sure that I've got all my bases covered.

 

[ChrisFlyer]

Is there a general "rule of thumb" that we should look at when considering the limit that we're exposed to? I remember seeing somewhere that if your total credit limit (across multiple cards) is >1/3 of your income, then you might not have luck opening a new card?
I'd like to apply for another Amex card and would like to make sure that I've got all my bases covered.

Most issuers will look at your total outstanding credit limits and presume that you need to pay 3-4% of that total limit in minimum repayments per month (that is, make the minimum payments if you max everything out). So, they will take your after-tax salary, deduct by this repayment figure, look at the other costs of living that you've declared along with any other known obligations (eg home loan), and see how much is left in the numbers. If the 3-4% figure puts you in negative territory (which means you would owe more than you earn), you can just about guarantee any application is going to be declined. Ditto if it's lineball. 'Responsible lending', and all that jazz. Some might have an unofficial percentage of income rule, but it's the serviceability calculation that's often the biggest roadblock. If you can run those numbers yourself and detect that you 'pass', you probably have a solid chance of being approved unless the issuer is particularly fussy about something.

 

[MG1]

Most issuers will look at your total outstanding credit limits and presume that you need to pay 3-4% of that total limit in minimum repayments per month (that is, make the minimum payments if you max everything out). So, they will take your after-tax salary, deduct by this repayment figure, look at the other costs of living that you've declared along with any other known obligations (eg home loan), and see how much is left in the numbers. If the 3-4% figure puts you in negative territory (which means you would owe more than you earn), you can just about guarantee any application is going to be declined. Ditto if it's lineball. 'Responsible lending', and all that jazz. Some might have an unofficial percentage of income rule, but it's the serviceability calculation that's often the biggest roadblock. If you can run those numbers yourself and detect that you 'pass', you probably have a solid chance of being approved unless the issuer is particularly fussy about something.

Thanks for the detailed reply, @ChrisFlyer. This is something I'll certainly need to keep into account as I'm in the process of building up my CC strategy.
I've never had an issue paying them off but sadly, this isn't taken into account.

 

[Cynicor]

Thanks for the detailed reply, @ChrisFlyer. This is something I'll certainly need to keep into account as I'm in the process of building up my CC strategy.
I've never had an issue paying them off but sadly, this isn't taken into account.

It is taken into account. If you had an issue prior you’d get even less credit

 

[ChrisFlyer]

It is taken into account. If you had an issue prior you’d get even less credit

Yeah, every month that you pay on time (which includes getting a $0 statement on which no payment is required) gets a 'paid on time' flag in your report as part of Comprehensive Credit Reporting. Those flags generally go back two years (despite the length of the credit file being longer), so it looks good to have lots of on-time payments... even if that's just a spare card that you don't use and just keep open.

 

[MG1]

Thanks @Cynicor and @ChrisFlyer.
That's an interesting note about the "multiple" on-time payments.

so it looks good to have lots of on-time payments... even if that's just a spare card that you don't use and just keep open.