There are many factors that affect your ability to get a Home Loan with one of these being the dreaded credit card.

Back in the olden days, most lenders took the overall credit limit of your cards and took 3% of the limit and treated this as a monthly commitment that you must cover. So a $20,000 credit limit means that you are treated as having a monthly commitment of $600 – regardless of whether you actually owe any money on the card!

The only shining light was that some lenders actually ignored the credit card if you paid it in full three months in a row.

It’s all changed though and not only will these lenders not do this anymore, most lenders now take 3.8% of the credit card limits making it even tougher. The $600 commitment has now increased to $760 and your borrowing capacity has dropped.

So what can you do about this:

• Reduce your credit card limit to what you actually need
• Cancel any credit cards that are not really needed

The difference to your borrowing capacity could be enormous!