Impact of credit card churning (on credit score) if I’m getting a mortgage soon?

[bobbydoes]

I keep receiving credit card cash back offers (e.g. spend $x in y days and get $z credited back) and have already churned from one CC to another (CBA) 2 months ago to take advantage of their offer.

Now I’ve received another one from ING that offers $200 cash back however I’m not sure of the impact of such frequent churn on my credit score if I want to get my first (PPOR) mortgage in the next ~6 months.

Curious for everyone’s thoughts as I’m not too familiar with credit scores!

 

[nealdx]

@bobbydoes In my experience, and I churn 6 to 10 cards yearly, it had no impact at all on both my credit score or my home loan application and approval there after. But this is just my experience of course.

 

[richard14river]

@nealdx User name checks out

 

[johnbiggs]

@nealdx Be careful with that. That’s a lot. The banks will eventually catch on and you might not be able to open the cards you actually want.

 

[nealdx]

@johnbiggs I’ve been doing this for 7 years now. Had my first credit card rejection last month since 5 years with Suncorp. Eventually you will get rejected but the banks do not seem to care about enquiries as long as your credit score is good.

 

[meganm112611]

@nealdx I agree. We churned for 10+ years with no issue. There's so few people churning that it doesn't seem to affect the credit cards banks are offering. The banks hope we forget to open a new credit card, then BAM! Our introductory interest ends and we'll be on 30% interest.

It only affects our credit score if we get rejected (which we were careful about). It's great that you're doing the same. Were you able to work out why you got rejected? i.e. if the offer only applies to new customers, credit limit is too high, etc. to make sure you don't cop another hit.

 

[johnbiggs]

@nealdx Banks don’t just have models to detect if you’ll not repay the loan. They have models to detect churning too. I’m surprised you’re not getting rejected more.

 

[nealdx]

@johnbiggs Everyone talks about this but I have never heard of these models to detect churning, or at least from my experience. I know a lot of others who churn and also don’t have any issues.

 

[hopeful82]

@nealdx Hi! Do you use a website or have a list of recommended cards to churn? I do 2 a year, but can’t find that many good desls

 

[nealdx]

@hopeful82 I use the below websites for looking for the best deals.

Qantas credit card comparison

Pointhacks

RWRDS

 

[jwyattharp]

@nealdx Can confirm, we do a shit tonne in both our names and no issues.

 

[ajw8606]

@bobbydoes The main issue isn't your score, having multiple enquiries and open lines of unsecured credit will impact your credit score. You can check this yourself and see what activity has done to your score. The issue will be if you have any debt when financing for your mortgage will be factored in for your possible serviceability. It is best to have no open credit cards when applying and to demonstrate that any debts you had prior were paid on time. If you had say a $10k credit card, they assume you have it maxed out and deduct the minimum repayments on that when calculating how much you can afford to pay on your mortgage (effectively negating the credit cards repayment amount from your wage then calculating what you could afford off that garnished wage). This is even if you had no outstanding balance on the card.

 

[northernwarrior]

@bobbydoes How does one start getting offers like these? I've been on the ANZ card forever and now looking at starting some sort of churning..

 

[nealdx]

@northernwarrior These offers are available to everyone across all the different banks credit cards. If interested I have a subreddit all about this. r/creditcardchurningaus

 

[phanzu]

@bobbydoes I churn cards pretty heavily as I travel a lot for work, generally 16-20 cards a year between my wife and I. Had no issues getting a home loan approved this year.

But remember this is anecdotal. This is my experience only, not a rule.

 

[bobbydoes]

@phanzu Thanks - not concerned about not getting approved for a loan but more so the potential reduced borrowing power? Do you think it’d be material?

 

[phanzu]

@bobbydoes Sorry, I can't help with that as I got pre-approved for a loan at least 25% below what the maximum would have likely been. And then borrowed 25% below that. So the broker was really chill about my CCs, just asked me to list them out and what the limit was. Not sure what would have happened if I had gone for max, maybe someone else here can help.

But for all purposes, the broker did not care about the previous churning, but rather what was the current total limit of all CCs open. My plan had always been to close all but one card before applying, but after contacting him he said it was fine due to the lower borrowing value.