How to use a credit card to make getting a home loan easier!

  • Select Sales Center Property by Select Sales Center Property
  • 6 months ago
  • Real Estate
  • 0

1. Always pay only how much you use

Every bank allows card owners to make minimum payments on their credit card debt. Without having to pay the full amount used each billing cycle, don’t ever take advantage of that opportunity if you’re thinking of getting a home loan. In addition to paying high interest rates, it also reflects that the card owner does not have enough money to pay all the credit card bills. This is a negative spending behavior of home borrowers that all banks avoid.

In this regard, the Bank of Thailand has announced gradually to banks and credit card business service providers to adjust the minimum credit card payment back to normal by increasing from 5% in 2023 to 8% in 2024, starting from 1 January 2024 onwards, and will return to normal at 10% in 2025.

2. Pay on time, don’t ask for more
Paying credit card debt on time as specified by the bank is a form of financial discipline that home borrowers must strictly abide by. This starts with repaying the debt according to the billing cycle to prove that the bank believes the home borrower is responsible for their debt without having to pursue it.

On the other hand, if there is a credit card overdue payment, that has to be pursued. The bank will see that home borrowers have a chance of being late in paying their home installments. Some banks will immediately file a lawsuit if you don’t pay your credit card for 3 months or more, which may cause you to lose your chance to apply for a loan with the bank for a long time.

3. Don’t overuse credit cards
Spending with a credit card until you run out of money month after month is unacceptable behavior for banks. The same goes for spending until your credit card limit is maxed out every month. This shows that the card owner spends a lot regularly.

Therefore, home borrowers must adjust their spending behavior by using swiping cards to purchase goods and services as necessary. To make the bank see that home borrowers can use credit cards wisely and worthwhile.

4. Don’t fall into the installment trap
Although 0% credit card installments are a good thing, they allow the card owner to avoid paying interest and reduce the burden of paying for products. However, using a credit card for installment purchases is like a double-edged sword that causes the card owner to have a history of outstanding debt based on the amount of the installment that has not yet been fully paid to the credit bureau.

There is also a chance that the income used for evaluating home borrowers’ ability to repay will decrease as well. This is because the bank must deduct the credit card installment burden from the home borrower’s income.

Moreover, even there is no need to pay a lump sum at one time. But you still have to pay the amount within the specified time. So you have to think about whether you can afford it or not. If you do not pay on time or in the amount, you may have to pay additional interest unnecessarily.

5. Close unnecessary credit cards
The more credit cards you open and hold, The more the total credit limit is. The chance of incurring large debts is very high. Therefore, to prove to the bank that home borrowers have credit cards to spend only moderately and do not have the opportunity to create large debts to compete with home debt.

Home borrowers should not carry more cards than necessary. This starts easily by canceling cards that are rarely used and keeping only 2-3 credit cards that suit your lifestyle is enough.

6. Don’t withdraw cash from a credit card
Home borrowers must always be aware that a credit card is a card used instead of cash, not a source of loan. If at any time a credit card is used to withdraw cash, it is considered game over. Because it means that home borrowers are having financial problems to the point of paying cash withdrawal fees and expensive interest to use the cash.

The bank will see that adding more home debt will make the home borrower’s financial situation worse than before. Which is not suitable for lending to buy a home.

7. Pay off credit card debt before getting a home loan
If the home borrower currently has credit card debt. Whether you are paying the minimum amount in installments or are currently paying the minimum amount. If you go ahead and apply for a home loan right away, it will probably be difficult to get through.

Therefore, home borrowers must take action to manage their debts to eliminate them first. Keep the card in a state of paying in full and paying directly until the remaining debt becomes 0 every month. Then don’t overpay for at least 1–2 years before applying for a loan. Don’t spend the last 3 months of your credit card on installments or buying unnecessary items. Applying for a home loan will therefore give you some chance.

However, credit cards are only one part of each bank’s home loan approval process. Many other factors affect whether a home loan application will pass or fail. However, building a good financial history by using credit cards correctly will increase your chances of getting a home loan, or at least It’s not a bad credit reason that will put an end to your home loan dreams.

Disclaimer: The information provided in this article should not be relied upon to make financial decisions or real estate investments. Immediately or legally, Readers should not rely on the information in the article. It does not represent advice from trained professionals who can consider your facts and circumstances. We cannot accept responsibility if you choose to rely on this information to make an informed decision.

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