You may have read overseas advice about keeping your "credit utilisation" under 30%. That idea comes from the US scoring system. It isn't quite how car lending works in Australia, but running your cards close to the limit can still hurt your application. Here's why, and what to do about it.
How Australian lenders look at your cards
There are two separate questions a lender asks:
- Can you afford the new loan? For this, most lenders use your total card limits, not your balances. They assume a monthly repayment of roughly 3% to 3.8% of the limit, whether or not the card is being used. We explain this in detail in how credit card debt affects car loan approval.
- How do you handle credit? This is where high balances matter. A lender reviewing your bank statements and credit file will notice cards that sit at or near the limit month after month, cash advances, only minimum repayments being made, or new cards opened to cover old ones.
A maxed-out card on its own isn't an automatic decline. A pattern of relying on credit to cover everyday costs is what makes lenders cautious.
Does it affect my credit score?
Australian credit scores are calculated differently by each credit reporting body. Comprehensive credit reporting means your file can show your limits and whether you've paid on time over the past two years. Missed or late payments tend to do more damage than a high balance paid on time. Each new credit application also leaves an enquiry on your file.
Practical steps before you apply
- Bring balances down over a few statement cycles if you can, so your recent statements show you're in control.
- Cut or close limits you don't use. This directly improves the affordability calculation. Keep written confirmation of any closure.
- Avoid cash advances and new credit applications in the months before you apply.
- Be upfront. If there's a reason your cards spiked, such as a one-off car repair or a medical bill, tell your broker. Context helps.
- Check your credit report for errors. You can get a free copy from Equifax, Experian and illion.
Should I consolidate first?
Sometimes rolling card debt into the car loan, or into a separate personal loan, can lower your total monthly commitments, but only if you close the cards afterwards. It also increases the amount you're borrowing, so it isn't right for everyone. It's worth talking through with a broker, and if you're struggling with repayments, the free National Debt Helpline (1800 007 007) can help.
Want a second opinion before you apply? Tell us about your situation in about 60 seconds and a licensed broker will call you. No credit check to enquire.
Related guides
- How outstanding credit card debt affects car loan approval
- Can you get a car loan if you've recently opened a new credit card?
- Car finance while paying off a debt consolidation loan
General information only. This isn't financial advice and doesn't take your personal circumstances into account. Lender policies vary and change over time. Finance the Ride is a referral service and doesn't hold an Australian Credit Licence. Last reviewed September 2026.
