On July 1, 2019, new debt registration rules came into force. The new rules mean that unused credit cards are considered debt. Having multiple credit cards is quite common in Norway. However, many do not have a conscious relationship to how much the total potential debt on these cards is, says Axel Milanhorri, head of retail banking at Lite Lender.
The Debt Register, which was established on July 1, 2019, provides other guidelines for how your credit rating is assessed. All cards that allow you to trade on credit are now considered part of your debt, regardless of whether the card is in use or not. That is, if you have a credit card when you apply for a loan, then your credit rating is assessed on the basis that you have used the credit on your cards, says Milanhorri.
Getting an overview is not always easy
If you are applying for a mortgage, or refinancing a loan, all of your current debt will be part of your ability to pay.
For example, if you have four credit cards with a limit of USD 50,000, this will be assessed as USD 200,000 in debt. This is true even if the cards are unused. Therefore, you will be considered to have a ability to pay less than what is actually the case, explains the bank manager.
The credit cards can mean you can’t afford the home you want, or you can’t get a loan at all. For those who want to clean up their own finances by refinancing, it is especially important to have a full overview.
When you start a loan process it is important to get an overview of your own finances and credit. You can even check this out here. Getting an overview is not always easy, especially if you are in a tight situation. Therefore, you may want to consult with professionals. We at Lite Lender can help you with this, says Milanhorri.
What kind of credits are common?
With the new scheme, ordinary forms of credit are considered debt, without this having to mean that you have poor finances. You may not even be aware of all the agreements you have made, the bank manager elaborates.
Examples of credits that are common in the household and that will affect your borrowing ability:
- gasoline Cards
- Cards with discounts and / or bonus schemes at airlines
- Football Credit Card
- Shopping account at stores (hardware or electronics retail)
- Membership card at the grocery store
In many phases of life you will need loans. Ending some of your credit agreements may be the grip that gives you the opportunity to regain control of the economy, stresses Milanhorri.
Contact: We can help
Do you have a challenging economy or are you afraid that you will not get the loan you need? Lite Lender are experts in private finance. If you need a new mortgage or need to clean up your own finances, Lite Lender is ready.
We are trained in helping people in all kinds of financial situations. If you come to us, we will help you get an overview, consider what opportunities you have and give you good tips on how to make good financial choices, Milanhorri concludes.