Aussie
New Member
Cash: $ 0.65
Posts: 3
Joined: 01 Dec 2009
Location: Australia
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Firstly I apologize if this is the wrong section, this post could be considered savings, debt, real estate and everything else...
So anyway, im in my early 20's, still at home, and my financial position breaks down like so
Full time secure job earning take home $600AU a week.
1x Credit card with a $5000 limit, pretty close to full.
1x Credit Card with $2000 credit limit
No savings
Only thing my credit report has is 3 credit applications, the 2 CC's in "Continuing Credit" of $750 and unspecified amount and an Mobile Phone "Telecommunication Credit". All three date back to mid 07 to early 08.
The $5k Credit card is low rate, no frills which ive whittled down from $9000. I use it as my day to day CC, currently put all my pay of it and buy things with it. Its why its pretty close to full, I reduce the Credit limit every week by a couple hundred when my pay goes off it.
The other one is one I used to purchase some goods on an interest free deal. Itll be gone and closed by end of January before interest kicks in. Still live at home with cheap enough board, so my income is largely disposable.
Sooner rather than later I need to buy a car and in the next year id like to buy a block of land to eventually build a house on. What im after is any ideas about how to go about it, all my current thinking is to pay off the (currently) interest free card and close the account. Between this and putting a bit of the other CC to live that will take me through to January.
From there I dotn know what to do, Im thinking save as much as possible for a couple months as a deposit for the land. Im thinking $300 a week savings, $100 a week of the CC and the rest on board and to live (which im doing atm). And getting a mortgage on the land and enough to buy a cheap car...
My thinking behind this is that surely a, say 4k card dosent look to bad hen I apply for a mortgage especially if the bank sees im paying of 4x the monthly amount every month and still saving. Id be comfortabely making double the repayments every week on the mortgage, so im saving interest which I think makes buying the car with the mortgage a viable option...
Just wondering if this sounds ok or if their are any better ideas, any guidance is very much appreciated 
Long term, id be paying stacks of the land for a few years and then use the equity to get a construction loan to build the house, but thats not my concern atm..
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Tue Dec 01, 2009 8:48 am |
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Raptor
Full Member
Cash: $ 14.50
Posts: 70
Joined: 15 Nov 2009
Location: Missouri
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You are in a good position, so don't read into the credit thing so deep. If you are debt free and have plenty money in a saving account, this will weigh heavier in your favor then if you paid multiple time per month on your debt. Since you have the financial discipline, you can afford to chase pennies. Put the money in a savings account and make a few dollars in interest and when your 0% comes due, pay the entire balance off, just before the double digit rates kick in. This approach is the mathematical correct approach, but doesn't normally work for the average person since they blow their savings and don't have the money to pay off the 0% deal, before the accured interest with double digits kick in.
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Tue Dec 01, 2009 9:54 pm |
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archercredit
Member
Cash: $ 4.00
Posts: 20
Joined: 25 Nov 2009
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quote:
all my current thinking is to pay off the (currently) interest free card and close the account.
Sounds like you a looking to make some big purchases in the future, car, house, land. No reason to close any credit accounts that are good standing. As long as they are below 35% balance these accounts are helping your credit score.
I would keep this account open, pay your bills on time, try to get your other credit card down to below 35% balance. This will all help and hopefully get you lower interest rates when the time comes for these bigger purchase.
Good luck, sounds like you are doing alright. http://ezinearticles.com/?Control-Your-Credit---You-Have-the-Power&id=2783436
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Wed Dec 02, 2009 7:56 am |
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Aussie
New Member
Cash: $ 0.65
Posts: 3
Joined: 01 Dec 2009
Location: Australia
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Archer, just incase your interested
Credit scores work differently here in Australia. Federal Legislation prohibits the recording of whether a credit application was accepted, declined or whether the account is closed off.
All it records in terms of credit is the 'application', the application amount (if the bank gives them the amount). Overdue amounts and their status, if the credit providor chooses to record them. (Ive had situations where I didnt get a phone bill, and it rolled over to the next month and the company didnt record it on the credit file, so I reckon the use is as a last resort)
So when you apply for a home loan, or other significant credit here, the bank looks up and tries to match up if your declared outstanding credit is about right to what they see on the Credit report, and documents you sign let them talk to each other to confirm it. Because of this, banks here look at the total credit amount and take that as the liability.
So in my case atm I have 2 cards totalling $7k credit, they will consider a montly liability of whatever the payment is on the full $7k when looking at loan feasability regardless of whats actually on it...
Thanks for the thoughts, the getting the interest thing never occured to me! Ironic since I have a high interest savings type account readily availiable to me...
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Wed Dec 02, 2009 7:14 pm |
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Aussie
New Member
Cash: $ 0.65
Posts: 3
Joined: 01 Dec 2009
Location: Australia
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In alot of ways yea, but the aussie system means that largely speaking you only have a chance to screw up your credit rating, not build a specifically good one. For example using my circumstance any bank I ask a loan for has no idea how many credit cards I have, how full they are, the fact Ive paid down them to the tune of 10k in the last months or how ive always paid the minimum. To give an exavt example on one all it shows is
"(DATE) - Bank New Member"
An application for a continuing credit account where you applied as the principal.
Amount $1000
Since then, the account has swiitched from a tertiary student account to a normal, increase in credit limit ten fold, the fact ive always paid the minimum amount and never had it full or over...
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Thu Dec 03, 2009 11:58 am |
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