Baycorp reports

[Tiki]

I am really curious as to how credit card companies get infomation on us. I sent away for the free www.mycreditfile.com.au report from Baycorp. There was practically nothing on it at all. Only that I have applied for 3 credit cards and it gave the names of the issuers who requested information from Baycorp about me. Everything else had a 0 next to it. How in the world would Amex have looked at that and decided to only give me $3500 credit? I was expecting a detailed report like monthly expenditure, how quickly I pay, stuff like that. Does Amex have access to a better report that we don't get?

 

[Dave Noble]

the Baycorp reports only provide information such as requests for Credit cards, loans et al and negative information such as defaults or court judgements and do not hold positive information such as good repayment history

Big Brother, sorry Baycorp, is, I hear, keen to start storing more information of that ilk

The fact that you applied for 3 credit cards may well have affected the credit limit offered

Dave

 

[Tiki]

Actually Amex was #3. #1 was the freebie Virgin Mastercard, I only took it because it was free and so I would have an emergency back up. #2 was actually my mobile phone account, I went from prepaid to postpaid.

It's really frustrating because while I do have a lower income, I also have fewer overheads. No kids, mortgage is $100 a week, don't drink or smoke. My disposable income basically gets put into our trips. I do have to watch the trip budgets though. When I lived n the States they do ask about your expenses and take more things into account when giving you credit. Here, they only seem to care about your income. I don't think that people with high incomes necessarily know how to use it better. My ex-boss made 3 times what I do and he never had money for anything extra-he does have 3 kids and a non-working wife. He also likes going out on Friday nights.

I don't really need the higher credit limit for daily expenses but it is giving me a major headache with one-off purchases like the RTW tickets. Using the Amex would get me 8000 PC points though. Using the Visa would get me 3100 Flybuys points.

 

[TonyB]

Actually Amex was #3. #1 was the freebie Virgin Mastercard, I only took it because it was free and so I would have an emergency back up. #2 was actually my mobile phone account, I went from prepaid to postpaid.

It's really frustrating because while I do have a lower income, I also have fewer overheads. No kids, mortgage is $100 a week, don't drink or smoke. My disposable income basically gets put into our trips. I do have to watch the trip budgets though. When I lived n the States they do ask about your expenses and take more things into account when giving you credit. Here, they only seem to care about your income. I don't think that people with high incomes necessarily know how to use it better. My ex-boss made 3 times what I do and he never had money for anything extra-he does have 3 kids and a non-working wife. He also likes going out on Friday nights.

I don't really need the higher credit limit for daily expenses but it is giving me a major headache with one-off purchases like the RTW tickets. Using the Amex would get me 8000 PC points though. Using the Visa would get me 3100 Flybuys points.

I could be wrong on this point (and I am sure someone will correct me if I am ) but your actual overheads (other than perhaps mortgage payments) are pretty irrelevant when assessing you for credit. My understanding from when I did this stuff years ago is that the credit providers use a set formula which has fixed average monthly expenses based on married, single etc. This means that you could be great at budgeting and saving money with monthly expenses of $500 but the credit provider will use a fixed amount of say $1000 a month - I guess this negates the inevitable situation of people grossly understimating their expenses to counter a lower income in the hope that it will result in a higher credit limit.

I think the key factors are your income and number of recent applications for credit. The US does have a different assessment process to Australia where they do take into account a lot of extra information such as the actual outstanding balance of a mortgage or credit card (rather than just the credit limit). As mentioned earlier in this thread Baycorp are pushing hard to have access to the same type of information as that used in the US, although there is considerable push back on the idea in Australia. Baycorp argue that with this information a credit provider can make a more accurate assessment of a person's ability to repay the credit and therefore reduce defaults and ultimately bankruptcy. Unfortunately, my understanding is that the evidence out of the US does not seem to support this argument and more information about the applicant's history and current situation does not result in fewer defaults.

 

[oz_mark]

I could be wrong on this point (and I am sure someone will correct me if I am ) but your actual overheads (other than perhaps mortgage payments) are pretty irrelevant when assessing you for credit. My understanding from when I did this stuff years ago is that the credit providers use a set formula which has fixed average monthly expenses based on married, single etc. This means that you could be great at budgeting and saving money with monthly expenses of $500 but the credit provider will use a fixed amount of say $1000 a month - I guess this negates the inevitable situation of people grossly understimating their expenses to counter a lower income in the hope that it will result in a higher credit limit.

Credit Providers so have a way of scoring you to determine whether tehy should extend credit, and if so,how much credit. However, from what I can gather, while they all have this aim, they all go about the scoring differently, take into account different things and so on. One credit provider may do it the way you say, but I would hesitate to suggest that they all go about it that way.

 

[Tiki]

Is there anyway around this? Some way to show them that their preset formula isn't doing me any favours and my actual situation should be taken into account? I can back up everything I say with bank statements, they could certainly see how much I spend on expenses a month, not to mention the mortgage payments which are direct debit. I honestly don't think that simply having a high income makes one a better credit risk. They should look at assets and home equity too.

If I could simply load my Amex with the money I need to pay for the tickets this wouldn't even be an issue. $5000 transferred in plus the $3500 credit would cover the tickets. I am looking at Feb to buy the tickets.

 

[Dave Noble]

Is there anyway around this? Some way to show them that their preset formula isn't doing me any favours and my actual situation should be taken into account? I can back up everything I say with bank statements, they could certainly see how much I spend on expenses a month, not to mention the mortgage payments which are direct debit. I honestly don't think that simply having a high income makes one a better credit risk. They should look at assets and home equity too.

Maintaining the account in good standing for a period of time and they will reasess the credit limit that they will allow

Dave

 

[Mal]

Maintaining the account in good standing for a period of time and they will reasess the credit limit that they will allow

Dave

Only issue is that Amex will only allow credit increases every 6 months or so I believe, and may require anything up to a year of "good behaviour" once opening an account before allowing an increase.

Wonder if Tiki is able to play the fun game of "apply for another Amex, then try and cancel it and merge the credit limits together".

Another way (as weird as it sounds) is to transfer a credit debt onto an Amex higher than the limit of the card. You can specify that you wish for your credit to be increased to handle the debt.

Maybe Tiki should phone up Amex and discuss options possible for extending the credit limit over the current amount. Not sure how receptive they may be.

I agree that Amex seems to be pre-occupied about income more than assets etc. My Qantas card that was just approved, was approved for more than my Plat Amex credit card. The only difference between the applications was about a $10K difference in income - and even then, the new credit limit exposes Amex to more than double the debt risk than they had before, but only a slight increase in income.

Neither times was I asked about assets, other debts etc.

 

[mstandfield]

Hello,

I have been a lurker on this site for long enough and thought it was about time to make a contribution.

Have you tried asking for a limit increase?

When I got approved for a AMEX Rewards Maximiser, they rang me and told me I had been approved and what my limit would be and if that was ok, I said I would rather a higher limit as the EZY Mastercard that I was closing was considerably higher then what they were offering me, he then doubled the limit on the spot, and said after 6 months I would be able to ask for another increase if I still needed an even higher limit.

Mal

 

[roryg]

Mal

Welcome, Mal (from another lurker!).

And my experience was just the same. Had a friendly discussion on the phone about the credit limit. Apparently I had been approved to double the limit they had actually "suggested".

I asked for the limit to be increased very slightly, and it was done on the spot. When the "welcome" pack arrived I had the lower limit and, a couple of days later, a letter arrived formally approving the increase.

 

[NYCguy]

Maintaining the account in good standing for a period of time and they will reasess the credit limit that they will allow

Dave

I concur. An acquaintance of ours applied for an Amex AU Gold Credit card and got it, but with a $5K limit. This gave him a bit of a suprise since he has a 6-figure income. After 12 months or maintaining a 'perfect' payment record, he got a letter offering him an increase to $15K.

So it seems that if you prove yourself trustworthy, a limit increase may well be forthcoming.