Credit cards and applying for a loan

Discussion in 'Property Finance' started by styereye, 3rd Jan, 2019.

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  1. styereye

    styereye Active Member

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    How long before you apply for a home loan should you close your credit cards to help with serviceability?
     
  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    depends
    only after the bank says you can't service is generally a good time
     
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  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    There are 2 aspects to credit cards and loan application - one is servicing based on the limits. This can be amended before or during the loan submission. You can have it as a part of the conditional approval.

    Then there is the credit scoring side - if you have too much unsecured debts (credit cards, personal loans, etc) and the overall application isn't strong such as LVR, employment, etc then this will affect the application and best to resolve it anytime prior to loan submission.
     
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  4. styereye

    styereye Active Member

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    I was hoping to use the credit card to fund renovations and then sell, then pay the credit card off. I'd like to buy soon after so it may be too tight
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    There's no practical time limit to this question. I've had lenders ask for confirmation of card closure 18 months after the event, just because it appeared on the borrowers credit report (another dumb lender request to add to a long list).

    Just make sure you receive and file a copy of the letter confirming the card has been closed. Lenders will accept this as part of a loan application the same day.
     
    Last edited: 3rd Jan, 2019
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  6. Noobieboy

    Noobieboy Well-Known Member

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    For what its worth, it takes about 2-5 months for the credit reporting agency to update the Credit Card account as "closed" on their reports... But then again, I assume a person can show the bank account closure letter to confirm that they actually closed the card. For servicing purposes.