Impact of credit cards on borrowing capacity
- Thread starter monalisa
- Start date
As a rule of thumb your credit card limit affects how much you can borrow by between 3-4 times the actual limit (depends on the lenders policy). It doesn't matter how much you actually owe.
If your affordability is so tight that a $5k credit card will make a difference, you're probably pushing it a bit too close and perhaps need to think about what you're doing.
A high yielding property will of course make a difference to your affordability. Rental income increases your affordability, debts (such as credit cards) decrease it.
If your affordability is so tight that a $5k credit card will make a difference, you're probably pushing it a bit too close and perhaps need to think about what you're doing.
A high yielding property will of course make a difference to your affordability. Rental income increases your affordability, debts (such as credit cards) decrease it.
When we applied to westpac for a loan several years ago to refinance another loan and buy an IP we were advised to reduce our credit card to stop it lessening our borrowing capacity. I think the limit was $5K at most.
We cancelled it and after the loan was set up westpac issued a card with a $24K limit. Go figure ...
We cancelled it and after the loan was set up westpac issued a card with a $24K limit. Go figure ...
Yep. Same happened to us. ANZ gave me the option for a platinum
rolleyes card at no extra cost, and an increased limit from about $9,500 to $12,000. Then they rejected our loan application. Went back to the Gold card @ $9,500, and after we got our loan then sent out a limit increase again! Didn't accept it this time.
I have gone from $45k limit in credit cards and a $40k personal loan to just $2k in credit cards to assist my serviceability.
It served a purpose when I was cash constrained getting into development, but have paid it off asap, so I can now leverage against the equity in the development and go again.
It served a purpose when I was cash constrained getting into development, but have paid it off asap, so I can now leverage against the equity in the development and go again.
I have had a CC with $24k limit for years.
Every loan that I have gone for they have said I need to reduce the limit and I have agreed that I could reduce it but I never actually did so.
I never been knocked back on any of the loans I have applied for.
I pay out the CC in full each month, so limit is always basically zero owing anyways.
Regards
Every loan that I have gone for they have said I need to reduce the limit and I have agreed that I could reduce it but I never actually did so.
I never been knocked back on any of the loans I have applied for.
I pay out the CC in full each month, so limit is always basically zero owing anyways.
Regards
I pay my credit card out each month also but even doing this every month for a number of years they will still take the worst case scenario when you are borrowing so best to drop it to the lowest amount you can,in my case I have westpac altitude points so I believe it is around $7500 is the lowest?
One way I got around this one was with a stat dec regarding the AMEX that is used 100% for work purposes (which it was) but I didn't want that $12k limit impacting on the loan apps either. And I did need that limit at times.
Yep its $8,000
My Westpac Altitude is only $5000. It was $10,000.
Why would there be a minimum?
St George sent us complimentary credit cards too. Sat them in the safe and never used them. Because we bought our new PPOR before selling the old one, lending was tight. We had to cancel them to get the finance.
Why would there be a minimum?
St George sent us complimentary credit cards too. Sat them in the safe and never used them. Because we bought our new PPOR before selling the old one, lending was tight. We had to cancel them to get the finance.
LOL - you just reminded me that Macquarie also 'gave' us a CC with our last loan... which is sitting locked up somewhere never used. Not sure of the limit, but I think it's pretty high.
Stupid banks! LOL - you just reminded me that Macquarie also 'gave' us a CC with our last loan... which is sitting locked up somewhere never used. Not sure of the limit, but I think it's pretty high.
It's cause they want you to use their credit card cause they earn money from it
It's cause they want you to use their credit card cause they earn money from it
They don't earn much from me, as I don't pay interest.
But they would still earn a bit from the retailers I spend at!
When we went for our last loan we had a card with CBA limit 6k. ANZ bank manager said that to get the loan we had to reduce the limit to 2k. So we did. Shortly after the loan went through an anz credit card arrived with a 6k limit! So how did our previous credit card affect our borrowing???
Not wanting 2 cards I closed the CBA - big mistake. Their rewards program is sooo much better. I have never paid interest on a credit card so me the rewards points get me a few gift vouchers a year where I normally shop (Well they used to).
And we are on the breakfree package at anz - which I believe requires you to have the 6k anz credit card to get the 1% discount. Cancel credit card, pay extra 1% and get loan Or keep card, get 1% discount and no new borrowings???
Not wanting 2 cards I closed the CBA - big mistake. Their rewards program is sooo much better. I have never paid interest on a credit card so me the rewards points get me a few gift vouchers a year where I normally shop (Well they used to).
And we are on the breakfree package at anz - which I believe requires you to have the 6k anz credit card to get the 1% discount. Cancel credit card, pay extra 1% and get loan Or keep card, get 1% discount and no new borrowings???
Aaron
If I had kept the CBA at 6k then I am assuming anz couldn't issue their card with 6k. They said what they needed to to get us away from CBA and using their card. But they don't get any interest out of me.
I regularly check internet banking and saw the credit was overdrawn by $20. I rang them and said I hope you are not going to charge me an over limit fee. I have a 6k limit for a reason - if there is no money there then transaction should decline. They did not charge me this time and I had to make a special request for them to put a stop in place so that my credit card can't be over drawn.
If I had kept the CBA at 6k then I am assuming anz couldn't issue their card with 6k. They said what they needed to to get us away from CBA and using their card. But they don't get any interest out of me.
I regularly check internet banking and saw the credit was overdrawn by $20. I rang them and said I hope you are not going to charge me an over limit fee. I have a 6k limit for a reason - if there is no money there then transaction should decline. They did not charge me this time and I had to make a special request for them to put a stop in place so that my credit card can't be over drawn.
They would only say that if the 6k limit with CBA would damage your servicing with ANZ and prevent them from giving you a $6,000 credit card of their own. Otherwise they wouldn't really care how big your CBA limit is.
Similar threads
