Reduce credit card debt 'to improve loan approval chances'

To increase the chance of a home loan approval people should be trying to reduce their credit card debt, one expert has said.

Australians need to reduce their credit card debt in order to improve their chances of being granted approval of a home loan, according to one industry expert.

Lesley Parker, writing for Business Day, advised people that other debts should also be fixed as well as any on credit cards.

Another hint individuals should consider to try to increase the chances of getting a home loan was detailing assets, such as savings accounts and investments.

Ms Parker added: "Avoid even small credit blemishes, such as a default on your mobile phone bill. Your credit file includes all rejections, so don't apply for credit willy-nilly."

And the writer warns that first-time buyers could have issues trying to secure a loan because big banks are looking towards business lending.

This news comes after it was revealed more than 44 per cent of Australians spend their wages on debts, such as home loans and credit cards.

By Mark Hornby