Does Credit Card Limit Affect Mortgage Approval?

By Bruce Boswell •  Updated: 12/14/21 •  6 min read
Filed under: Credit Cards

Having somewhere to live is probably the most important thing in life. Shelter has always been at the forefront of human survival. 

Over time, we adapt and change. We go from living with family or friends and maybe we rent a property for a while – but eventually, we want to buy our own place.

Does Credit Card Limit Affect Mortgage Approval

Maybe we want our freedom, or maybe we want to leave our family with something when we pass away. Whatever the case, unless you’re lucky enough to have a lot of money – the likelihood is you’ll need to apply for a mortgage. 

Mortgages can be complicated and mortgage applications take your credit into consideration – probably the most crucial aspect of your mortgage application.

So when it comes time to apply, you might be concerned about your credit card limit and if that will positively or negatively affect your chances of mortgage approval. 

Luckily, we’ve created a useful guide to mortgages and credit below, starting with some basic information but overall answering – does your credit card limit affect the chances of mortgage approval? 

Let’s dive in. 

What Exactly Is A Mortgage?

A mortgage is a special type of loan that allows you to purchase a property or even refinance a property (such as re-mortgage) and they’re often called mortgage loans. 

You can think of a mortgage as a secured loan. If you fail to meet the repayments agreed in your mortgage agreement, the mortgage provider can cease your home as collateral. Typically, you can expect your mortgage to last 15-30 years – but this can differ depending on circumstances. 

It isn’t a straightforward process when buying your own home. From mortgage application, mortgage approval, searching for your home, making the offer, getting accepted and final approval to closure.

Within these processes, there may be attorney costs and additional fees that might not have been apparent to you. It’s always worth getting mortgage advice before formally applying to check affordability and availability.

What Is Taken Into Account When Applying For A Mortgage?

The eligibility requirements may differ from lender to lender, but generally you can expect the following factors to be key:

Understanding The Credit Score Factor

Your credit score is an indicator to lenders of your reliability and financial stability. It provides lenders with an idea of how you can manage credit and avoid large debts.

Because of this, your credit score will play a massive role in what credit will be approved to you. This can be anything from a hire car to a mortgage – and the better your credit score, the better the chances of approval and the more competitive the interest rates will be (if any at all!). 

There are many myths around what can seriously improve your credit or what can harm it and the question at the heart of this is – can credit card limits affect the chances of approval?

The answer is no. In fact, it’s quite the opposite. The higher your credit limits, the more likely you are to be approved for a mortgage.

In normal circumstances, lenders such as credit card companies will offer their customers who are reliable and stable, a higher credit limit because they have proven for a few months and years that they can manage their credit limit and repay it on time.

This provides a positive indicator on your credit report – and should improve your credit rating. 

However, it is important to know that even with a high credit limit – poor management of your credit will negatively impact your score and therefore your chances of mortgage approval. So, what’s the solution?

Credit Management 

In Conclusion

Your credit card limit will not necessarily affect your mortgage approval, but the higher it is, the better – assuming you’re managing your credit. 

Bruce BoswellBruce Boswell

Bruce Boswell

Bruce Boswell enjoys researching and writing about all things related to investing and saving money. Whenever he has a chance, Bruce loves travelling all around the world with his wife and trying new foods.