Are you aware of what sort of impact credit cards can have on your borrowing power when you're applying for a loan?
Here we have a look at two applicants:
Applicant One - Has one credit card
Applicant Two - Doesn’t have a credit card
Both are earning the same income, have the same living expenses, both have a HECS commitment they are paying each month, but applicant one has a $20,000 credit card and applicant two does not have any credit cards. In this instance, there is almost a $100,000 difference in the borrowing power just because of that one $20,000 credit card.
What does this mean?
Well, if you’re looking to apply for a loan anytime soon, you might want to take stock and have a look at the credit cards that you do have.
Keeping in mind that the bank is going to work off the credit card limit, not how much you’ve got outstanding. So, it might be worthwhile reducing some of those limits or getting rid of any credit cards you don’t need.
