Your Borrowing Power Shrank This Year. Here Is Why, and What You Can Do

The good news: capacity is not fixed

Borrowing power is not a single number handed down from on high. It responds to how your file is built. These are the levers I pull for clients.

1. Clear or reduce revolving credit. That $20,000 credit card limit you never use still counts against you at the full limit. Reducing or closing it can free up meaningful capacity.
2. Deal with small debts. A car loan or a buy now pay later account can cost you many times its balance in borrowing power. Sometimes paying one out before applying is the single best move.
3. Choose the right lender. This is the big one. Lenders use different income rules, expense benchmarks and policy overlays, so the same file can produce very different numbers across lenders. In a flat rate market, the lender you choose matters more than ever.
4. Structure the loan properly. Loan term, product type and how your income is counted all move the dial.
5. Present income in full. For self employed and salaried borrowers alike, capturing every allowable income source and add back can change the outcome.