Credit Card Limit

I don’t understand BNZ’s logic in determining credit card limits.

I am currently a student who is financially supported by my parents, I have had a joint credit card with my mum for 4 years (Because I couldn’t get a card under my own name). This year I decided I didn’t want to pay the joint card fee anymore so I decided to apply for a card under my own name, and also I wanted to change to a cash back credit card.

The joint credit card I have with my mum is solely used by me and paid off on time every month by me, but BNZ will not take this into consideration. I also have savings in the bank which are greater than the credit limit I want.

After speaking to a banking advisor and going through my application this was passed on to the credit card people who declined my application. I rung back after finding out about it being declined and spoke to a different banking advisor that agreed with my based on my situation I should get approved, but after passing this on to the credit card people the best they were able to offer me was a $500 limit, and say they will be able to reassess in 3-6 months’ time.

Over the 4 years that I have had my visa, I have paid over $50,000 on time and I believe this should be taken into consideration. Shouldn’t the people that process credit card applications take into account the ability of someone to repay the credit card (history and savings) rather than one factor that can determine their ability to pay (income)

Both the banking advisors that I contacted were very helpful, the problem I have with BNZ is the people that determine the outcome of an application.

So starting next week when my new card arrives I will have 2 credit cards, one with a $500 limit, that will hopefully have its limit raised and my joint card with my mum that I will have to use when my other card is getting near its very low limit. All so that 1 day BNZ will increase my limit. The one good thing is they are waiving the annual fee on my cards.

Certainly there are other factors the bank takes into consideration which would outweigh any previous loyalties you may have shown to the bank. Its not just about income and previous history although that helps its how much of that income is already committed to other things. There is also the matter of your credit history. It might be that your credit score is too low. Or maybe you have too many negative entries on it. Or you just don’t meet the banks lending criteria. There could be lots of reasons.
As you have discovered paying what you owe on time does not necessarily make you a good customer if the bank aren’t making any money off you by way of fees and interest etc and you’ve already said they are waiving the annual fee.

Hey @Sam01, to answer your question (about the application taking into account history and savings, instead of just income) - @ford’s right, the application is considered against a variety of factors. Check out this thread which I think contains some really useful information about how the credit ecosystem works: There’s also a link in there to a blog on Credit Scores if you’re interested.

I understand that I am not the usual applicant, as I have absolutely no credit history and no income. But I have most of my banking with BNZ and my parents have also offered to guarantor my credit card, but BNZ have said they do not do this.
BNZ have an internal credit score on me if the bother to look at the $50,000 paid by me. This averages out to about $1000 a month which is less than the limit BNZ are offering me, how am I supposed to build up a credit score if BNZ won’t give me credit.
I believe that BNZ should use logic when assessing applications rather than following an algorithm that doesn’t always work.
I bank with BNZ because my parents do, but if they can’t recognise my goo payment history I might as well just wait till I’m working full time and move my banking to a different bank as I will be starting from the same point.
I don’t understand how they can say in 3-6 months they will be able to reassess based on my repayment history, when nothing else has changed. I have already proved good repayment history.

In an ideal world there would be someway that BNZ could transfer my 4 years of credit card payment history to a credit score agency so that this can be reflected in my credit score.

Also do any branches (Either branches in Tauranga or Auckland CBD) have staff from credit card team that assess applications or are these staff only in your offices.

I will most likely use my new card for 3 months then want to contact the people that actually assess the credit card applications.

From how it looks to me, you don’t appear to have a credit history in your own name. The $50,000 you mention as being paid by you over 4 years will not appear as being paid by you, as you state you have no income and its not being paid against your debts but against a joint debt of your mother and yours. The sooner you can get a history of both income and repayments of debt in your own name, the better. The fact you have access to a joint card with your mother may also be counting against you ?

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Having no income would be a huge contributing factor. If you want to build up a credit history go and open regular banks. BNZ, ANZ, TSB, Coop and SBS will all check your credit history with Veda Advantage first. The first time you open a bank account or apply to leading in your name your credit report will be started. If you apply for any credit card facility on-line the application goes via Veda. Every time banks and companies enquire into your credit history points are actually deducted against your credit score. If you want to have a good credit history open up one bank account and don’t get any lending. If you want the banks to “love” you do all your banking with them and show how a substantial part of your income is uncommitted and make sure you never have any defaults listed against your credit history, ever.  My suggestion is to go and get a part time job that gives you regular income and be consistant with your spending and payments. The banks themselves will look at your actual bank transactions. So if you spend a lot of money on casino’s, gambling etc that will also go against you. Because you have no income you will be considered in the financial industry as being subprime. From your post it seems that some people at BNZ have at least thought you have potential. My suggestion is to just get a standard credit card with a low limit. Or get a debit card and transact throught that. When I first started borrowing 20 years ago, it continued into a long line of debt. Now years later I’m paying the price. The debt footprint stays with you for life. Don’t ever use the banks money (credit card) to pay basic living expenses. Your income from your main job should at least cover that. In your case it looks like that you cannot support yourself. Certainly having your parents support you would not be in your favour. Get a job and get your own place to live. Show the bank via your regular bank transactions that you can support yourself. If you knew how credit scoring actually works there is no way on earth you would ever want anything on your credit report.  My son is in his late 20s has had the same job for 10 years, earns a good income and no defaults on his credit report. The bank told him that his score was only 450 (out of 1000) he has had a lot of lending in the past but has never been in default. It takes five years for items to drop off a credit report. When they do the credit score gains a few points. That’s the only way a credit score increases in points. But his credit score is now ruined for life. But the banks still “love” him but his score is too low for the banks to want to lend him any substanial money like for a mortgage.  Please don’t let that happen to you.

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I wouldn’t worry too much at this point. Take the $500 and the credit limit increase offers will start coming in a few months if things are as you say…

Whether it’s a wise choice to have a higher credit limit is another discussion. Feel free to PM me if my opinion on that would be of any use.