Key takeaways
- Lenders count your credit-card limit, not your balance — even a $0 balance counts.
- A high unused limit can cut your borrowing power by tens of thousands.
- Reducing limits or closing unused cards before applying can lift how much you borrow.
- Keep a modest, well-managed card if it supports your credit history.
If there’s one easy win in home-loan preparation, it’s this. Buyers agonise over their deposit and rate while a forgotten credit-card limit quietly caps how much they can borrow. Lenders assess the limit, not the balance — so an untouched card still counts against you. Fixing it takes a phone call, and can add real money to your budget.
Why the limit is what matters
From a lender’s point of view, you could max out the full limit tomorrow — so they assess your capacity as if you had. A $20,000 limit is treated as a potential commitment even if the balance is zero, reducing the income available to service a mortgage in your serviceability assessment. The balance is almost beside the point.
How much it costs you
Because borrowing power is a multiple of surplus income, a high card limit can reduce what you can borrow by tens of thousands — far more than the card itself. Alongside car loans and buy now pay later, credit cards are one of the biggest silent drains on borrowing power.
Before you apply, review every card: close the ones you don’t need and reduce the limits on the ones you keep to what you actually use. It’s one of the fastest, cheapest ways to increase your borrowing power — and it also tidies your credit file.
Don’t go to zero cards
The goal isn’t to have no credit — a modest, well-managed card can support your credit history under Comprehensive Credit Reporting. The goal is to cut unnecessary limits. Keep what serves you, trim the rest, and you present as a lower-risk borrower with more capacity.
Broker Insight. The most common quiet drain on borrowing power we see is an unused card with a high limit. Trimming or closing it before you apply can be a one-phone-call win worth tens of thousands.
Turn a phone call into extra borrowing power
We’ll show you exactly which cards to trim or close before you apply — and how much borrowing power it frees up. Free, no obligation.
Book your free game plan callFrequently asked questions
Do credit cards affect how much I can borrow?
Yes — and more than most people expect. Lenders assess your credit-card limit, not your balance, because you could draw the full limit at any time. So a $20,000 card you never use still counts as a commitment and reduces your borrowing power, often by far more than the card’s balance. Reducing limits or closing unused cards before applying is one of the fastest ways to borrow more.
Should I close my credit cards before applying for a home loan?
Closing or reducing the limits on cards you don’t need usually helps, because lenders count the limit against your serviceability. If you rely on a card, lowering the limit to what you actually use is often enough. Keep at least a modest, well-managed card if it supports your credit history — the goal is to cut unnecessary limits, not to have no credit at all.
Does a zero-balance credit card still count?
Yes. Because you could spend up to the limit at any moment, lenders assess the full limit as a potential repayment commitment regardless of the current balance. A paid-off card with a high limit can quietly reduce your borrowing capacity by tens of thousands. This is why reviewing your limits is a key step before applying.
This guide is general information only and does not take your personal circumstances into account. It is not financial or credit advice. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation.