How Credit Cards Can Reduce Your Borrowing Power in 2026

If you’re planning to buy a home or investment property, here’s something most people don’t realise:

– Your credit cards could be reducing how much you can borrow — even if you don’t use them.

I see this all the time. Clients come to me thinking they’re in a strong position, but their borrowing power is being impacted by something simple… their credit limits.

Let’s break it down.

Are Credit Cards Bad for Your Borrowing Power?

Not necessarily.

If you use your credit card responsibly — paying it off on time and managing it well — it can actually help build a solid credit history.

But when it comes to home loans, lenders look at things differently.

How Lenders Actually Assess Credit Cards

Here’s the key point most people miss:

→ Banks assess your credit limit — not just your balance.

So even if:

• Your balance is $0
• You pay it off every month
• You rarely use the card

A lender will still treat your full limit as potential debt.

Example: How a Credit Card Impacts Borrowing Power

Let’s say you have:

• A $10,000 credit card limit
• No outstanding balance

From a lender’s perspective, that $10,000 is still a liability.

→ This reduces your borrowing capacity — sometimes by a significant amount depending on your income and other commitments.

Why This Matters More in 2026

In today’s lending environment:

• Interest rates are higher
• Assessment rates are stricter
• Living expenses are scrutinised more closely

→ This means your borrowing power is already tighter.

So small things like credit card limits can make a bigger impact than they used to.

How to Improve Your Borrowing Power

If you’re planning to apply for a home loan, here are simple steps that can help:

✔ Reduce your credit card limits ✔ Close unused credit cards ✔ Avoid applying for new credit before a loan ✔ Review your overall financial position

→ These small changes can improve your borrowing capacity without increasing your income.

Common Mistake to Avoid

One of the biggest mistakes I see is this:

❌ Buyers focus on income ❌ But ignore their liabilities

→ Borrowing power isn’t just about what you earn — it’s about what lenders assess.

Why Strategy Matters

This is where working with a mortgage broker makes a difference.

Different lenders assess credit cards and liabilities differently.

→ I regularly see borrowing capacity vary significantly between lenders for the exact same client.

That’s why structuring things properly before applying is key.

Final Thoughts

Credit cards aren’t the problem — but how they’re structured can impact your ability to borrow.

If you’re thinking about buying property:

→ Don’t just look at your income
→ Look at your full financial position

Because the difference between getting approved — or not — often comes down to the details.

CTA (IMPORTANT FOR CONVERSIONS)

Want to know how much you can actually borrow?

At Truth Group Pty Ltd, I help you: ✔ Understand your real borrowing power ✔ Structure your loan correctly ✔ Avoid common mistakes before applying

Reach out today and I’ll help you get clear on your numbers before you make a move.