Credit Ratings

#1

G’day,

We’ve been out of the property market since 2012, but are hoping to pick something up in the next 2 years or so, now my wife’s rejoined the workforce.

With her working, we decided to replace one of our old cars, and were going to save for it, but then decided it would be better to take a loan out, as banks (used to?) like you showing your ability to service a loan.

Before taking this step, I checked my credit rating, curious to see if the odd late phone bill had caught up with me. And - my rating was over 800 / 1000. “Excellent”.

Take out a $20k loan… and my credit rating drops 100 points. “Very Good”.

A month later, it’s dropped a further 40 points, despite not just paying my repayments on time, but paying 4x the amount required. “Good”.

What’s going on here?

Reduced borrowing capacity due to the new loan, driving the points down? OK, I get that - but why the further decrease, when I’m making my repayments on time? There’s no negative reports on my rating.

I think I preferred ignorance…

cheers

cosmic

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#2

I didn’t even know there was a number or that you could look it up in Australia, I always thought that was an American thing. Where do you get this information anyway? I’d be interested in what sort of number I have for shits and giggles.

I think that if you can show a regular savings history or loan repayments they take that as a positive compared to someone who just spends it all on ‘stuff’ every fortnight. Beyond that I always though it was a matter of capacity to repay being the primary factor.

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#3

I believe we’ve always had a credit system, but I don’t think it’s been as “public” as it is in the USA. I just went with the first listed site on the ATO’s website. Free service.

From what I went through getting the car loan, and what I’ve recently read about banks & loans - due to the Royal Commission - they are now looking a lot harder at prospective customer’s spending habits. When I got my previous mortgages, there was NO serious “budget” considerations asked (mortgage brokers both times) - just “What’s your total cost of living?”. This time however, they wanted to know the breakdown of where my money goes, such as:

Internet
Phone
Childcare
School costs (myself & kids)
Health
Groceries
Dining Out
Automotive / Petrol
Entertainment
Insurance

There was more I’m sure.

The “funny” part was… To answer the queries, I was using my CommBank’s spending “app” to give my answers. I did wonder as I was answering the questions whether the person on the other end (also Commbank) was looking at the same details…

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#4

Thanks for the Credit Savvy link. I didnt know these places existed. I got 862 which I guess is fair, since I am running a credit card and pay 4x whats needed each month. I want to get it paid off but theres always something… currently, a HWS about to crap itself. Oh well, it can be paid out of my estate when the time comes.

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