Multiple Credit Card Enquiries Can Reduce Credit Scores

Application Overload: Credit Savvy Study Finds Multiple Credit Card Enquiries Can Reduce Credit Scores by Nearly 200 Points

  • New research by Credit Savvy reveals potentially risky credit behaviour
  • 1 in 7 Australians has at least five credit card enquiries on file
  • Credit Savvy warns consumers against continually switching credit cards

Sydney, Australia, September 22, 2015: The credit card habits of Australian consumers are in the spotlight, with research by consumer advocate, Credit Savvy suggesting that an alarming number of Australians are engaging in credit behaviour that may be detrimental to their ability to access credit in the future.

A study of 50,000 Australians [1] suggested that multiple credit card enquiries had a negative effect on a consumer’s credit score. Australians with five or more credit card enquiries on file had an average score 128 points lower than Australians without any enquiries, while consumers with more than seven credit card enquiries on file were on average 187 points worse off . [2]

A credit score is a number that represents an individual’s credit-worthiness. Experian credit scores are calculated out of 1,000 and can be used by lenders to assess the risk of lending credit to an individual.

The Credit Savvy study also found that 14.1% of individuals had five or more credit card enquiries on their Experian credit file. This increased to 20.3% when looking specifically at 25-34 year old Australians.

Dirk Hofman, Managing Director of Credit Savvy, said he was worried that consumers were unaware of the risks involved with making a large number of applications.

“When you apply for a credit card, the lender can make an enquiry at a credit reporting body. Each time they do this it leaves a footprint on your file showing you’ve applied for credit. These enquiries can stay on your credit file for five years so if you switch cards every year, you could easily end up with five enquiries on file,” said Mr Hofman.

“If you have a large number of enquiries on your file in a short period of time, when you go to apply for another credit card or a loan, a lender might consider you more risky to lend to when they do a credit check.”

Credit Savvy provides consumers with free, ongoing access to their credit score and Experian credit file information.

Mr Hofman said, “We encourage Australians to check what enquiries they have on their credit file by using a free service like Credit Savvy. People should consider only applying for credit when they need it and have done their homework to make sure the product is suitable for them before they apply.”

“Continually applying for new cards might not be the best idea, as it can hurt your credit score and potentially your ability to get that card or loan a few years later.”

Note to Editors

[1] Study based on a sample of 50,000 Credit Savvy members as at 17/09/2015. [2] Numbers are based on an extract of Credit Savvy members and are only representative of these members

About Credit Savvy

Credit Savvy is a free online service that helps Australians understand their credit reputation and how they can actively manage it. It uses data from credit reporting body Experian to provide Australians with free access to their credit score, free monthly re-scores and the ability to track their score over time and receive alerts for any key changes to their Experian credit file.

Changes to the Australian Privacy Act in 2014 allowed more information about each consumer’s credit behaviour to be included in their credit file, such as credit limits and repayment history. In doing so, Australia is moving towards a system of Comprehensive Credit Reporting which has been adopted in other countries, such as the US, UK and NZ. Approximately 80% of credit active Australians don’t know their credit score.

For more information, please visit www.creditsavvy.com.au

Media enquiries: Jo Balfour / Shuba Paheerathan Progressiva PR +61 405 542 018 / + 61 438 606 424 jo@progressiva.com.au / shuba@progressiva.com.au