Understanding the Impact of Your Credit Card on Loan Eligibility
When it comes to the relationship between your credit card history and loan applications, it seems many people are in the dark about what’s truth and what’s not. Gather a group of normal Australians in a room and ask them about the role their credit card plays in getting a loan – you will likely get these responses:
- ”It’s fine that I have multiple credit cards – it means I’m a low-risk borrower”.
- ”I just need to pay off my monthly card balance and I can secure any loan I want”.
- ”I don’t even use my credit card – the chances of me getting approval is high”.
These statements aren’t true, however – your credit card could affect your chances of getting a loan in more ways than you realise. Read on to see what separates fact from fiction! How lenders assess your loan application Lenders normally focus on one metric to decide whether you’re a suitable loan candidate or not – card limit. This shows your repayment capacity, and lenders normally judge the minimum figure to be 3 per cent of your card’s limit, regardless of how much you owe when you apply. What about my credit history? While your card limit is important, your credit history is another important point to consider when applying for a loan. While a history of debt won’t completely rule you out from securing a loan, it will limit your chances of securing a deal with favourable terms and interest rates. Similarly, if you have a good credit history, you’ll have a better chance of finding a more competitive loan. How can I improve my chances of securing a loan? There are a couple of things you can do to improve your chances of securing a loan:
- For more information about how to improve your chances of getting a loan, contact our team today.
- For more information about how to improve your chances of getting a loan, contact our team today.
- For more information about how to improve your chances of getting a loan, contact our team today.
For more information about how to improve your chances of getting a loan, contact our team today.