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How Credit Cards can Impact your Home Loan Application

A credit card affects loan apps by influencing credit score, loan serviceability, and financial responsibility indicators. Want to know more? Click here

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Ah, the old credit card conundrum and your dream abode's financial courtship! It's a tale as old as time, or at least as old as credit. So, you're eyeing that cozy nest or perhaps a lofty tower? Well, pump the brakes, pal, because here's the skinny on how that plastic pal in your pocket might just sway the home loan honchos.

First off, those loan lords have one beefy question on their minds: "Can this hopeful homeowner pay us back without breaking a sweat?" Fair dinkum, right? To get to the nitty-gritty, they're gonna snoop around your cash flow, your outgoings, your IOUs, the little (or not-so-little) ones you're supporting, your jobbie job history, and yep, you guessed it — your credit rendezvous history.

Now, don't get it twisted. Even if you're the poster child for credit card responsibility, that card of yours is still gonna throw its weight around in the home loan arena. Why, you ask? It's all about the limits, baby. A high credit card ceiling could mean a lower home loan sky — meaning, the more you could potentially owe, the less they might lend.

So, let's dive into the murky waters of credit cards and home loan dreams, shall we?

How your Credit Card Imacts your Home Loan application

  • Borrowing Power: This is the dough the lender's willing to front you.
  • Credit Score: Your financial street cred — the higher, the better.
  • Credit History: The saga of your borrowings and paybacks.
  • Credit Card Limit: The max moolah you can splurge on your card.

Now, lenders have a bit of a detective streak. They'll comb through your financial laundry, including that credit card, to gauge if lending you a stack of cash is a risky business. And even if your card's just chillin', it's the potential for splurge they're eyeballing.

The Weight of Your Credit Card in the Mortgage Mashup

It's a bit like asking how spicy your meal is — depends on the dish and your palate. Your credit card's influence on your mortgage dreams can be as minimal as a dash of pepper or as eye-watering as a ghost pepper, based on your card's limit and your swiping habits.

  • Credit Card Limit: High limit = less borrowing power. It's like planning for a rainy day — if you max out your card, can you still cover the mortgage.
  • Swiping Savvy: Show you're a credit card whiz, and you'll likely keep your home loan hopes high. But slip up, and it's red flags all around.

Preparing Your Credit Card for the Application Limelight

Owning a credit card isn't a deal-breaker. It's how you play the card game that counts. Keep your spending smart, your limits reasonable, and your repayments on the dot, and you could still be in the home loan running.

  • Trimming Your Credit Limit: Not planning to splurge? Consider lowering your limit to boost your borrowing power.
  • Ditching the Plastic: If it's gathering dust, maybe it's time to say goodbye. It could just sweeten the pot in your home loan haggle.

To Close or Not to Close Your Credit Cards?

If your cards are more of a safety net than a necessity, cutting them loose could buff up your borrowing muscle. But if they're part of your financial strategy, keeping them might be your best bet.

An alternate strategy is to consider the Credit Limit attached to the card, under Responsible Lending the your assessing bank is obligated to assess your mortgage application in the worst case scenario - that is a maxed out credit card. So if you can make do with a lower Credit Card Limit, you can do that too!

Getting a Credit Card after your home loan application

Congrats! But if you're itching for a new credit card post-approval, remember, the financial landscape has changed. Your new mortgage is now part of the equation.

In the grand scheme of things, yes, your credit card dances a tango with your mortgage application. The depth of their dance depends on your credit limit and your repayment history. Control these, and you could be well on your way to a successful home loan harmony.

Fancy a chat about polishing your credit card act for the mortgage stage? Hit us up! Explore your Home Loan Options Today.png

Disclaimer: Unless otherwise specified, the opinions expressed in this article are strictly for general informational and entertainment purposes only and should not be taken as financial advice or recommendation. Views are subject to change without notice at any time.

Written By


The Craggle Team

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