How does a charge card affect obtaining future credit?

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andye

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I was curious about this but haven't managed to find a definite answer anywhere on the web so thought this forum would know.

When you apply for a mortgage (and many credit cards) one of the factors is your existing credit limit (i.e the bank will usually assume you need to repay the payments as if you were using full credit limit when assessing affordability). When a mortgage application is at the limit of affordability many financial advisors suggest reducing the credit limits on your cards to improve accepatance.

How is a Charge card viewed in these circumstance? They will often have quite large lines of credit but my thinking is as they are repaid in full each month they shouldn't count as a debt. I can't recall ever seeing sections for charge cards on applications previously.

(Obviously you take a hit to your credit score when you first apply)

Thanks
 

moa999

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I suspect they are generally viewed as a potentially non-repaid balance
 

andye

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If so, I could see some first-time buyers coming unstuck with this
 

dalereardon

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Hi,

Just did a home loan application with a CBA mobile banker so asked this very question re Amex gold charge card. He said the CBA assigns a nominal limit of $5000 for such a card and assumes minimum payments on that amount.

Don't know re other banks.

Dale.
 

yohy?!

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charge cards don't have lines of credit in the sense of debt that can be rolled over - I'd imagine the bank would assign a nominal amount you could potentially spend in a month which would be reasonable given typically if you didn't repay your balance one month your charge card would be restricted or severely limited in how much you could spend until it was brought back to good standing.
 

moa999

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But its the black-hat scenario the banks worry about.

You lose your job, go out drinking, crash the car, lose $$s at the casino,
and max out everything in a month (as you can)
 
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