Will Closing The Clients Credit Cards Increase Their Borrowing Capacity?

Yes, if your clients close their credit cards it can increase their borrowing capacity. This is because borrowing capacity largely relies on an individual’s income and debt owed. In short, owning one or multiple credit cards can significantly negatively impact borrowing capacity. Your clients can increase their borrowing capacities through several different ways, closing their credit cards is just one option. 

Decreasing high credit limits is another way to increase borrowing capacity. If a client has three active credit cards with $15,000 limits on each, brokers and banks will view this as the client has $45,000 in debts and subtract that amount from their overall borrowing capacity. 

Paying off high-interest rate debts is another option to increase borrowing capacity, especially if the client pays their debts during interest-free periods. Lenders and mortgage brokers will also perform financial history and credit checks to verify a client’s repayment capabilities. Paying repayments and bills on time and in full is a great way to increase your borrowing capacity while also boosting your credit score and financial history. 

Saving for a larger deposit can also boost a client’s borrowing capacity. This can also show mortgage brokers and lenders that the individual in question is able to successfully save their money and be responsible with their finances. A client should work with a mortgage broker prior to making any big decisions on a loan to ensure they can receive the best home loan deal that fits their financial status.