The “Chase 5/24 rule,” which states that Chase won’t approve your credit card application if you’ve opened more than five new credit card accounts in the previous 24 months, may be well-known to many of you.
Since its implementation, this measure, which was intended to discourage people from opening credit cards just for the sign-up bonus, has had a significant impact on the best credit card strategy in the US.
Though it’s more for risk assessment purposes than just focusing on frequent credit card applicants, there appears to be a similar pattern with MBNA credit card approvals that’s worth being aware of. Overall, we haven’t seen any Canadian issuers enacting any such policies.
A Comprehensive Guide to Understanding MBNA Credit Checks
Hello there, credit-aware friend! If you’ve been wondering who MBNA sends credit checks to, you’ve come to the correct place! We’ll delve deeply into the world of MBNA credit checks in this extensive guide, revealing the mysteries surrounding their operation and giving you the tools you need to take charge of your financial future.
Let’s start with the basics:
- What is a credit check? A credit check is a review of your credit history, which includes information about your past borrowing and repayment behavior. Lenders use credit checks to assess your creditworthiness and determine whether to approve you for a loan or credit card.
- Why does MBNA perform credit checks? MBNA, like all responsible lenders, performs credit checks to minimize risk and ensure that they are lending to borrowers who are likely to repay their debts. This helps them protect their business and keep interest rates low for all customers.
Now, let’s get to the heart of the matter:
Who does MBNA use for credit checks?
MBNA uses two major credit bureaus in Canada: Equifax Canada and TransUnion Canada These bureaus collect and maintain information about your credit history, including your payment history, outstanding debts, and credit inquiries. When you apply for a credit card or loan with MBNA, they will request your credit report from one or both of these bureaus.
What information does MBNA see in my credit report?
Your credit report contains a wealth of information about your financial history, including:
- Personal information: Your name, address, social insurance number, and date of birth.
- Credit accounts: A list of your credit cards, loans, and lines of credit, including the account type, credit limit, balance, and payment history.
- Public records: Any bankruptcies, judgments, or liens that may affect your creditworthiness.
- Credit inquiries: A record of who has requested your credit report, such as lenders, employers, or landlords.
How does MBNA use my credit report?
To evaluate your creditworthiness and decide whether to approve you for a loan or credit card, MBNA consults your credit report. They’ll take into account things like your credit utilization, debt-to-income ratio, and payment history. They will assign you a credit score—a numerical assessment of your creditworthiness—based on this information.
What can I do to improve my credit score?
There are several things you can do to improve your credit score, including:
- Pay your bills on time: This is the most important factor in your credit score. Even a single late payment can have a negative impact.
- Keep your credit utilization low: Aim to keep your credit card balances below 30% of your credit limit.
- Limit the number of credit inquiries: Every time you apply for new credit, a hard inquiry is placed on your credit report. Too many hard inquiries can lower your score.
- Become an authorized user on a credit card with good credit: This can help you build credit history without having to open a new account.
- Dispute any errors on your credit report: If you find any errors on your credit report, contact the credit bureau immediately and request that they be corrected.
Additional Resources:
- Equifax Canada: https://www.equifax.ca/
- TransUnion Canada: https://www.transunion.ca/
- MBNA Credit Education Centre: https://www.mbna.ca/en/help-centre/credit-education
Remember, maintaining a good credit score is essential for your financial well-being. By understanding how MBNA uses credit checks and taking steps to improve your credit score, you can unlock a world of financial opportunities.
Now, go forth and conquer the world of credit, my friend!
The MBNA “5/6 Rule”
Many people’s experiences suggest that MBNA applies a loose “5/6 Rule” to credit card applications. This means that if you have had five or more hard inquiries in the last six months on your TransUnion credit report, your application is probably going to be rejected for having too many recent inquiries.
I call it a “rough” rule because it doesn’t seem to be applied consistently. A few data points show that people have been denied for having too many inquiries even though they are under 5/6, and others have received auto-approvals despite having more than five TransUnion hard hits in the previous six months. Nevertheless, these occurrences seem frequent enough to establish a general pattern.
(In that sense, perhaps it should be referred to as a “5/6 Guideline,” but that doesn’t sound as good.) ).
Keep in mind that MBNA typically obtains information from your TransUnion credit report rather than your Equifax credit report, so the quantity of recent inquiries on TransUnion is what counts. As a reminder, the major Canadian credit issuers generally pull from the two major credit bureaus as follows:
- Equifax: BMO, CIBC, HSBC, TD
- TransUnion: Amex, MBNA, RBC, Scotiabank
You can therefore avoid falling into 5/6 territory by being mindful of how many credit card applications you’ve submitted to Amex, MBNA, RBC, and Scotiabank, and only applying for a new MBNA product when you have fewer than five hard hits on your TransUnion file over the past six-month period to maximize your chances of instant approval. Use a service like CreditKarma or Credit Verify to keep up with your TransUnion file.
A minor distinction from Chase’s 5/24 rule also exists here: while Chase considers the quantity of recently opened accounts, MBNA considers the quantity of recent inquiries, which are recorded on your credit record even in the event that the application is ultimately denied. A rejected credit card application from an issuer that obtains data from TransUnion may therefore have greater weight if you intend to cycle through MBNA’s cards (though there are still ways to mitigate this, as we’ll discuss below).
If you’ve already reached 5/6 and are having trouble getting approved by MBNA, you may want to temporarily stop asking TransUnion questions and instead concentrate on the issuers that obtain information from Equifax, such as TD or CIBC and their range of travel credit cards.
In the meantime, if you’re new to the game, it’s also a great idea to apply for the MBNA Alaska Airlines MasterCard as soon as possible to avoid having your application denied due to the 5/6 Rule. This is especially true given that Amex and RBC, which also pull data from TransUnion, have numerous credit cards that are worthwhile obtaining when you’re first starting out.
Clever Check explained | MBNA
FAQ
Which credit bureau does the MBNA pull from?
What credit score is needed for MBNA credit card?
Does MBNA check Equifax?
What bank does MBNA use?
Who makes MBNA credit cards?
Credit cards: are issued by MBNA Limited. Registered Office: Cawley House, Chester Business Park, Chester CH4 9FB. Registered in England and Wales under company number 02783251. Authorised and regulated by the Financial Conduct Authority.
Which MBNA credit card should I buy?
If you are looking for a balance transfer card specifically, you are best to stick with the MBNA True Line Mastercard, since its offer is longer and has 0% interest, and its purchase APR is lower. Once you have paid off your credit card debt, you can look for a different rewards credit card, if that’s what you’re in the market for.
Is MBNA a good bank?
It offers an extra function to many all-round cards with the inclusion of money transfer. Its interest-free periods stack up well against its rivals. Although MBNA is part of Lloyds Banking Group – alongside Lloyds Bank and Halifax – balance transfers from those providers are accepted to this MBNA card.
Why did MBNA become a company?
MBNA virtually invented the process for securitizing credit card debt and this process contributed significantly to the fast growth of the company. It allowed for increasing the amount loaned without having to acquire matching assets to offset the loans. In Canada and Europe, the MBNA name was retained.