Does Christmas Spending Affect Your Borrowing Power?
A common question we get around this time of year is whether Christmas shopping and festive spending will affect your borrowing power.
The good news is that one-off Christmas expenses generally do not reduce your borrowing capacity. Lenders are far more interested in your long-term financial behaviour than a single month of higher spending.
What Doesn’t Usually Affect Your Borrowing Power
Buying gifts, hosting events, or taking advantage of sales won’t usually impact your borrowing power. Lenders assess your typical monthly spending, not seasonal spikes.
What Actually Impacts Your Borrowing Power
1) Ongoing debts and credit limits
Credit card limits, personal loans, car loans, and buy now pay later services play a much bigger role than holiday spending. Even a credit card with no balance can reduce your borrowing power if the limit is high.
2) Regular living expenses
Lenders look at your usual spending over the past three to six months, such as groceries, subscriptions, childcare, insurance, and general lifestyle habits.
3) Income stability
Consistent, reliable income is a key factor. One month of higher spending does not change your income position.
4) Savings behaviour
Lenders like to see consistent savings over time. A quieter month in December won’t undo solid savings habits throughout the year.
5) Existing financial commitments
Current loan repayments or rent have a larger impact than seasonal spending.
Should You Stress About Christmas Spending?
In most cases, no. Christmas spending will not damage your borrowing power unless it turns into ongoing debt or new long-term commitments.
The real impact comes from high credit limits, new loans, regular high spending, or inconsistent income.
Need Clarity on Your Borrowing Power?
If you want to understand exactly where you stand heading into the new year, we can review your situation without affecting your credit score. Just reach out when you’re ready.
