Lender's score - snapshot or more sophisticated?

jakesuk

I'm thinking of applying for a number of credit cards in a short time period and making the most of some initial rewards offers out there.

In the short-term this would have a negative impact on my credit rating as I will have several searches in a short time frame, probably on the same day.

Assuming I get expected for one or more cards I'll have more available credit and I already have over 50% available credit compared to annual income.

If I am looking for a mortgage or other credit card at some point in the future (say 12 months from now) can I quickly close down some accounts, wait for the CRAs to update the accounts as being settled and then apply for the new mortgage or card? Do lenders make a decision purely be based on an applicant's situation at a snapshot in time or would they look in any more detail at the recent situation? Do mortgage lenders different from credit card providers in this respect?

Does anyone know? Does anyone care? Thanks...

bigadaj

Why are you in such a rush, calm down dear.

Wouldn't it be more sensible to apply for a credit card, then wait a couple of months and apply for another. Similarly there seems little point in having more than say three cards, so when getting a new close an old account soon after.

Do you carry balances on your current cards?

The credit check is done over six years, though newer usage would normally be more important, just do things slowly and steadily and this will look far better.

jakesuk

bigadaj wrote: »

Why are you in such a rush, calm down dear.

Thanks for your response, I'm perfectly calm.

bigadaj wrote: »

Wouldn't it be more sensible to apply for a credit card, then wait a couple of months and apply for another. Similarly there seems little point in having more than say three cards, so when getting a new close an old account soon after.

I want as many rewards as I can possibly access now, then close some accounts and keep the cycle going. I currently have 6 credit cards which carry minimal balances. All are either paid in full each month or are in 0% periods. I don't incur any interest. Before you suggest I close any down they all serve a function.

bigadaj wrote: »

Do you carry balances on your current cards?

The credit check is done over six years, though newer usage would normally be more important, just do things slowly and steadily and this will look far better.

I am aware settled accounts remain on the credit report for 6 years. Lenders look at various ratios such as income vs available credit and used credit vs unused credit. My question really was whether these ratios are purely a snapshot, so from a lender's perspective you could go from a complete No to a Yes by quickly closing some accounts....

bigadaj

OK, you've now answered your own question. You might get some anecdotal evidence here but it will often be contradictory, whilst you can afford a card you could be rejected on the basis that you won't be profitable.

Whilst it's nice to have rewards the numbers are pretty small, so my view is don't go mad.

You might improve your chances by closing down unused accounts, but the credit report will be looked at in the round over the period which is available for review.

If you are considering a mortgage then be careful, as this could impact on the lenders impression of your ability to pay and attitude to credit.

meer53

Why are you applying for more cards if you only have minimal balances on the 6 you already have ?

Any lender who sees that number of cards with unused balances will be very wary of offering you more credit. In addition to the fact that you already have over 50% credit to income.

I know you say you want to close some accounts "quickly" but in theory this is easier said than done, once you've closed an account you need to allow time for these closed cards to show on your credit files, getting the timing right can be very tricky.

To be honest, (and i make lending decisions for credit cards in my job) you sound desperate. Why do you need so many cards ? Attitude to debt is something that is included in my decisions.

jakesuk

meer53 wrote: »

Why are you applying for more cards if you only have minimal balances on the 6 you already have ?

Any lender who sees that number of cards with unused balances will be very wary of offering you more credit. In addition to the fact that you already have over 50% credit to income.

I know you say you want to close some accounts "quickly" but in theory this is easier said than done, once you've closed an account you need to allow time for these closed cards to show on your credit files, getting the timing right can be very tricky.

To be honest, (and i make lending decisions for credit cards in my job) you sound desperate. Why do you need so many cards ? Attitude to debt is something that is included in my decisions.

I am habitually enjoying using credit cards to get the maximum reward out there, whether that means a slow stooze, cashback or a reward for applying for the card.

I agree that my income to available credit ratio will count against me, hence why I am tiptoeing around a bit. On the plus side I don't have any late payments and have stable address and employment history.

My attitude to debt is presumably not good to a lender? What would you think? I'm out there to make a profit. I have more savings than debt so I don't think I am risking anything personally by playing around.

You say I sound desperate. I think that is an accurate assessment. I'm desperate for rewards/cashback. Don't want to push my luck though, and appreciate all advice given.

jakesuk

bigadaj wrote: »

Whilst it's nice to have rewards the numbers are pretty small, so my view is don't go mad.

If you are considering a mortgage then be careful, as this could impact on the lenders impression of your ability to pay and attitude to credit.

The numbers are small - agreed. There's something satisfying about the whole process and I can't resist.

In terms of a mortgage, that is the biggie so I take on board what you are saying. I just hope that a number of well managed accounts over a number of years, and low debt (at the time of applying for the mortgage) will give me an A+++ rating!

bigadaj

jakesuk wrote: »

The numbers are small - agreed. There's something satisfying about the whole process and I can't resist.

In terms of a mortgage, that is the biggie so I take on board what you are saying. I just hope that a number of well managed accounts over a number of years, and low debt (at the time of applying for the mortgage) will give me an A+++ rating!

The biggest factor, don't forget is a decent deposit.

jason1231972

jakesuk wrote: »

I just hope that a number of well managed accounts over a number of years, and low debt (at the time of applying for the mortgage) will give me an A+++ rating!

This isn't a criticism of you as such, just an observation...

...I'm wondering what all the fuss is about having a supposedly excellent credit history (which, by the way, is assessed in different ways by different lenders, and for different products). It seems to be a point of utter obsession. So long as people always honour the terms of their existing credit agreements (i.e., pay!), and don't go mad/overboard on credit spending, one's credit history will sort itself out, with minimal intervention required.

You don't need an 'A+++' credit rating to get mortgages, loans, CCs, etc. You just need to be good, both historically and now, and meet certain criteria re: income, etc. Being (or classifying yourself!) as absolutely top-notch, cream of the crop won't get you anything different.

And once you successfully 'get' all the products you want, then what?

meer53

jakesuk wrote: »

I am habitually enjoying using credit cards to get the maximum reward out there, whether that means a slow stooze, cashback or a reward for applying for the card.

I agree that my income to available credit ratio will count against me, hence why I am tiptoeing around a bit. On the plus side I don't have any late payments and have stable address and employment history.

My attitude to debt is presumably not good to a lender? What would you think? I'm out there to make a profit. I have more savings than debt so I don't think I am risking anything personally by playing around.

You say I sound desperate. I think that is an accurate assessment. I'm desperate for rewards/cashback. Don't want to push my luck though, and appreciate all advice given.

If you're planning on applying for a mortgage in the future, i'd concentrate on reducing your credit to income ratio and managing a couple of cards really well. Lenders can't see that you're using the cards for rewards or cashback, and you may not get chance to tell them this. In any case, even if you do, they may choose not to believe you.

It's like people who apply for consolidation loans and are surprised when they are refused. They think that they have a foolproof way of paying off their debt and reducing payments. All good in theory but how can a lender be sure that the borrower will not just go off and spend it all and not repay their debts ? Lenders will always go with the worst case scenario these days !