How to increase your borrowing power
Borrowing power is not a fixed number attached to you. It is the output of one lender's formula applied to your circumstances, and several of the inputs are things you can change. Some of the levers work in days, some take months, and a few of the popular suggestions do very little at all.
The fastest lever: credit card limits
Lenders assess the limit, not the balance, on the reasonable assumption you could draw the full amount tomorrow. An unused twenty thousand dollar limit is treated as a commitment. Reducing or closing cards is the quickest meaningful change available to most borrowers, and it takes days rather than months. It should be modelled first, because closing a long-held account also removes credit history, and because the limit reduction needs to be documented before assessment.
Clearing small, high-repayment debts
A personal loan or car loan with a large monthly repayment and a small remaining balance can be worth clearing outright, because the repayment counts against you far more than the balance does. The arithmetic is specific: paying out a debt reduces your deposit, so the question is whether the borrowing capacity gained exceeds the deposit lost. Sometimes clearly yes, sometimes clearly no.
Getting variable income evidenced properly
For anyone whose income includes overtime, bonus, commission, shift penalties or allowances, this is frequently the largest single lever and it costs nothing. Two years of payslips and an employment letter that describes the income accurately can move the assessable figure substantially, because lenders differ enormously in how much of it they count. The overtime guide covers the treatments.
Choosing a different lender
Not a trick, simply the reality: every lender sets its own assessment rate, living-expense floor and income treatment. The same household routinely receives figures hundreds of thousands apart from different institutions. Before restructuring your finances, it is worth knowing whether a lender exists whose written policy already suits your income shape. That is the assessment work rather than a change you make.
What moves the number, and how fast
Roughly ordered by speed of effect.
Days. Usually the fastest meaningful improvement, and one of the largest for people carrying several cards.
Immediate, if the documents exist. Costs nothing and frequently worth more than any other change.
Days to weeks. Worth modelling against the deposit reduction rather than assuming.
Three to six months, because lenders read statements. Declaring less than your statements show does not work.
Want to know which lever applies to you?
Charles can model the specific changes worth making on your file, and tell you which ones would not be worth the effort.
Borrowing power questions
What increases borrowing power the most?
For most people, reducing unused credit card limits and having variable income evidenced properly. Both are quick and neither requires earning more. Beyond that, choosing a lender whose policy suits your income shape is frequently worth more than any change to your finances, because the differences between lenders are larger than most borrowers expect.
Does a longer loan term help?
It raises the figure, because the assessed repayment is spread over more years. It also costs considerably more interest over the life of the loan. It is a real lever and a genuine trade-off, worth using deliberately rather than by default.
Should I close my credit cards?
Often reducing the limit achieves most of the benefit without losing the account history, and closing is worth it where you genuinely do not need the card. Either way it should be done before assessment and documented, and modelled first, because for some borrowers the effect is small and for others it is substantial.
Will paying off my HECS help?
Sometimes, and less than people expect. The compulsory repayment counts as a commitment, so clearing it removes that. But the money used to clear it is money no longer available as deposit, and lenders treat HECS differently from ordinary debt. Where the balance is small and nearly cleared it can be worth it. The HECS guide covers when.
Does asking several lenders hurt?
Applying to several does, because each application leaves an enquiry on your credit file and a cluster reads badly to the next assessor. Comparing lender policies through a broker does not, because no application is lodged until a lender is chosen.
Related guides
General information only, not credit or financial advice. Professional lending policies, eligible occupations and loan-to-value thresholds vary by lender and change over time. Eligibility is confirmed against current lender policy in an assessment; nothing on this page is a promise that any lender will approve any application.
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