Why unused limits can still matter
When assessing affordability, lenders commonly allow for a repayment commitment based on a credit card's limit, rather than only today's balance. The calculation varies by lender. An unused facility can therefore reduce available borrowing capacity even if you pay it off every month. There is no universal dollar-for-dollar rule for how much your mortgage capacity changes.
Include buy now pay later arrangements
Buy now pay later instalments are commitments, not free additions to your budget. A lender may review balances, account limits, repayment patterns and related transactions. Treatment varies by provider and lender, so disclose the facilities and ask what supporting records are needed. Do not assume a small instalment or an interest-free label makes an account irrelevant.
Build a complete credit inventory
- List every card, store account and buy now pay later facility, including unused ones.
- Record limits, balances, repayment dates and any missed or overdue amounts.
- Add personal loans, car finance, overdrafts and other financial commitments.
- Collect recent statements and closure confirmations where relevant.
Check this list against your bank transactions. Be honest about recurring spending and instalments so your proposed mortgage budget reflects real cash flow.
Review your credit report for errors
Obtain your credit report through the recognised credit reporting bodies and check your identity details, listed accounts and repayment information. If something is incorrect, follow the provider's or reporting body's correction process. Fixing an error is different from trying to remove accurate negative information; be cautious of services promising a quick credit repair.
Discuss changes before applying
Reducing unnecessary limits or closing unused accounts may help an assessment, but it is not an approval guarantee. Consider your practical needs and ask what evidence the proposed lender requires. Account closures and report updates can take time, so keep written confirmation. Avoid taking out new finance while a home loan application or settlement is in progress without discussing it first.
Keep the bigger affordability picture in view
Income stability, living expenses, deposit, property valuation and other debts still matter. Removing a card does not fix an unaffordable budget. Use our borrowing power calculator as an estimate, then review the assumptions with a broker.
Further reading
ASIC Moneysmart: credit scores and credit reports.
General information only, not personal financial, tax or legal advice. Credit-reporting practices and lender assessment policies vary. Credit is subject to assessment and approval.