If you are at your credit card limit then you are more likely to be refused a loan.
Lenders often think that credit should be used to manage peaks and troughs in expenditure. For example, Christmas or the kids returning to school. Or to buy big ticket purchases like holidays, cars and homes.
Consequently, if you are at your credit card limits this may give a lender the impression that you are using the cards to live beyond your means. Furthermore, if lenders suspect you’re using credit to pay for day-to-day living expenses, you may be declined.
Some lenders work on the basis that if you are above 75% of your credit card limits a loan application will be declined.
Just making minimum payments? That’s not a good sign either.
Some creditors will have access to your credit card and overdraft balances over time. Should these be increasing, your loan application may be declined. Cash withdrawals on a credit card often means ‘No’.
Constantly hovering at your overdraft limit will not go down well either.
Additionally, being at your credit card limit will reduce your credit score. As a result, if you want to, for example, get a mortgage, you may struggle.
There’s another way
A loan from Bradford District Credit Union could help you pay down credit card or overdrafts. If you then keep below limits or pay off any balance in full each month, your credit score can improve.