G'day Dave. I've been involved in financial services since 1986. I'm an ex bank manager, and currently doing financial planning and a bit of mortgage broking so thought I'd throw in my 2 cents. If the only reason to get a card is to build up your credit rating, you're wasting your time. Our credit rating system isn't really a rating system at all. It's really a credit reporting system. Basically this means that every time you apply for credit, it is recorded on your file. Change mobile carrier, it gets recorded. Apply for a credit card or loan of some sort, it gets recorded. Even establishing an account with a utilities company gets recorded. Then on the negative side, things like having a default for non-payment recorded or a court judgement against you are 'black marks' against you. The big weakness in our credit reporting system is that it doesn't show any positives. You can make every payment on time over your lifetime and the system doesn't show it.
I have done heaps of loans for people who have nothing recorded on their credit file - it's not a bad thing to have nothing there. So it is a bit of a myth to establish a credit 'rating'.
If you need a credit card, feel free to get one. I'd probably take it out with the bank you intend to get your home loan with, just to establish a bit of a relationship with them. Most banks these days have a range of credit cards that should suit. Just a word of warning though. When the bank assesses your home loan application, they take into consideration your credit card limit. You are obliged to pay 3% of the outstanding balance each month on your card. Because you can draw up to the limit at any time, the bank uses the limit, not the balance, in calculating your monthly commitment. If for example you have a $20,000 limit, but clear the balance each month, the bank will factor in a monthly commitment of $600, which is taken off your capacity to pay off a home loan and will have a pretty big impact on how much they will lend you. If your limit is only $1,000, the monthly commitment is only $30, and so has bugger all effect on what they will lend you.
The other thing to bear in mind is that home loan lending has tightened up a fair bit in the last 18 months. Many banks will ask you for a savings record, where you can show that you have been putting money aside at the rate of $x per month for at least 6 months. Showing just a deposit of $x amount in your account is not enough, because someone could have lent this to you - you need to prove that you have saved it. You used to be able to borrow 100% of the purchase price, but this has been reduced to 90 or 95% in a lot of cases.
The other thing they look for is stability - both of employment and residence. Usually they go by 2 years - 2 years in your current home and 2 years in you current job. These aren't deal breakers though, but they will want to know why you've moved around.
Hope this helps. I'm dealing witha woman in her 40's who is buying her first home and has $30,000 on her credit cards, hence my warning. A fair bit of generalisations in the above. Feel free to ask any questions on the forum or by PM.
