Advice please , My son is 24 is full time apprentice and only bills in his name is his Optus mobile, car insurance & Afterpay.
He has 2 cars which he paid cash for.
He has tried to get other lines of credit but gets knocked back , credit score is 742.
He has maybe 4 enquiry’s on his credit file over the past 12 months , his mobile has been paid late a few times and unsure of Afterpay .
He has asked me for advice but I am unsure why he is getting knocked back.
Anyone know why he is getting declined?
Or what he can do to get a credit card or line of credit ?
Thanks in advance
6 Replies
Most likely it’s because his income is too low.
Have you checked this no other accounts were opened under his name with the Optus hack?
It’s because his income is too low. They have a minimum number of expenses they have to put in the system, wether he has those expenses or not.
It’s basically an algorithm they use that can’t be changed. The argument is that he can’t afford to pay his bills and credit card if there is a change and he needs to pay normal life expenses.
I went through the exact same thing, lived at home so had plenty of disposable income. In hindsight I’m glad they didn’t lend to me.
He’s better off working on building a savings while he has the advantage of low expenses and then when his income increases revisiting credit.
Not having a line of credit won’t disadvantage him when applying for home loans etc if that’s his goal. They often ask you to get rid of credit cards etc. in order to be approved.
He really has limited credit history, with four application attempts and a low income.
Get him to make an appt with his bank for advice.
In the early days I had my parents go guarantor on a GE Finance (had a different name back then) loan to buy white goods. I was a new mum and got a fridge and freezer pigeon pair on the buy now pay later and always made my payments on time. That was my jump into building a credit rating.
In the same vein, my partner got a similar loan, I don't remember what for and ended up taking money out of the card and got himself into a mess paying only the minimum due. They can be a trap if not used properly. I eventually had to pay out his GE debt and have him close out the account so we could get our mortgage.
Any way, talk to the bank and see what they advise. Maybe there's a small limit no frills credit card available? Maybe they can advise a savings plan so if he's no ready for debt/credit yet they can get him there sooner.
I work in the industry, the credit score is good but stop applying, the number of applications do impact your credit score and lenders willingness to lend to you as you look like you are credit seeking.
It may also be his earnings are not enough for the amount he is seeking plus they will be looking at his spending habits and capacity to repay based on his current spending. If his accounts look like he spends alot/most of his income and is living week to week it may be an issue.