Can Multiple Credit Cards Impact a Home Loan Application?

Bonus joining points and travel miles can make credit cards seem like a great addition to your wallet, but it may be biting into your ‘soon to be filed’ home loan application, without you ever realising it.

Yes, the number of credit cards held by you, the combined credit limit and your repayment behaviour have a significant impact on your credit file.

A credit file is the single most important thing that lenders use to judge prospective borrowers. In case you are planning to apply for a home loan, we advise you to pull out your credit file online from a site like Veda Advantage and check for any black spots.

Most people mistakenly believe that having smaller credit limits on many credit cards wont interfere with their borrowing capacity. But every time you apply for a new credit card, the creditors are authorised to make an inquiry into your credit report. And each inquiry brings down your credit score.

Your credit score is the magic number that lenders see while mulling over your application. Maintaining a score of 750 and above can get you access to many home loan deals at low interest rates.

So before you unknowingly ruin your credit score, check out these tips to manage your credit card while you apply for a home loan:

  1. The outstanding debt on your card is the amount reported on your credit card statement. Pay the full amount before the statement is generated to have zero debt reported on it.
  2. Do not default on bill payments or utility payments – they stay on your file for many years.
  3. Check your credit statement regularly for any black spots.
  4. Do not hold more cards than you need.
  5. If your credit limit is much higher than what you need, have it reduced before making a home loan application.
  6. In case you hold more than one credit card, disclose all the cards at the time of making a home loan application. Nothing affects your application as badly as incomplete disclosure.
  7. As rejected loan applications reflect on your credit file, compare best home loan dealsand get in touch with an expert to apply for most suitable products according to your needs.