The holiday spending has not started yet. For many of your clients, November is one of the most useful times of the year to talk about holiday spending and the impact on their credit.
Discussing credit utilization with your clients before the holidays may not sound like an important topic. But a credit score is often a snapshot in time, not usually what’s going on with a person throughout the year. A spring application may reflect the balances carried through December.
A client who spends heavily in December and pays it down by April could still look stretched on paper in between. If a renewal, refinance or purchase lands in that window, the timing may matter more than the client realizes.
A broker who raises this now is offering something a rate sheet cannot. It’s an easy, customer-service-focused phone call, and clients tend to remember that broker who called before the problem rather than after it.
Here are five things worth discussing to clients before the December holiday season gets underway, and what to do when their credit card balances are already high.
Utilization compares what a client owes on revolving credit with the total amount of debt available. The dollar amount alone may not tell the whole story.
For example, $4,000 across cards with $20,000 in combined limits is 20% utilization. A $2,700 balance on a single card with a $3,000 limit is 90% on that account, even though the client owes less. The 90% utilization has a greater impact.
The Financial Consumer Agency of Canada recommends using less than 30% of a personal total available credit. Lenders tend to view borrowers who regularly use a large portion of their available credit as higher risk, even if their payments are made on time. Government of Canada guidance
Staying under 30% does not guarantee a particular score, but keeping each balance well below its limit may help a person’s credit score.
The minimum payment is designed to keep an account current. It is not designed to clear what was spent in December.
On a high-interest card, a holiday balance carried at the minimum would take years to pay off because much of each payment goes towards the interest.
Paying the minimum on time helps protect the payment history, which matters. But the balance stays on the report, and therefore so does the utilization.
Installment plans offered at checkout can feel like a payment option rather than a borrowing decision, and many clients do not count them when they add up what they owe each month.
Some buy now, pay later providers may report to the credit bureaus, and a missed installment would show up on a credit report if they do. Several plans at once can mean several due dates, and it can be easy to lose track of one. Explain the risks to your clients and tell them to avoid these plans. Keep things simple.
The classic example is the department store credit card offered at the till in exchange for a discount.
Each application usually means a credit inquiry, and each approval adds a new account to the report. Recent applications and account age may both affect a score, so the discount may not be worth it ahead of a mortgage application. Many clients are tempted to spend when they know they have available credit as well.
A client planning to buy, refinance or renew in the first half of 2027 may be better served by leaving their credit profile alone through December.
Some clients do not know exactly when their mortgage renews. A renewal in March or April can change what responsible December spending means.
Credit reports are generally updated at least monthly, and different accounts may update at different times, so holiday balances could still be reported when a spring application is reviewed. Credit report and score basics
If a client reaches maturity still carrying high revolving balances, their options may be limited if they are requesting a HELOC or looking to go elsewhere. Pulling your renewal list and reaching out for the first half of 2027 turns general advice into a more specific conversation. Lead with customer service.
Some clients do not need a budgeting conversation. They need a plan, because the balances were already high before the holidays.
Consider this illustrative example.
A client’s mortgage renews with their bank in April. Their Ontario home is valued at approximately $850,000, with a first mortgage of about $470,000. Every payment has been made on time, but a busy year has pushed the revolving debt close to the limits:
That is $39,000 owed across $42,000 of available revolving credit—about 93% utilization—before a single holiday purchase.
The client is house rich, cash poor, with monthly cash flow stretched by high-interest payments. This is not a client in trouble. It is a good client with a timing problem and a renewal date.
Being careful over the holidays is good advice, but it may not be enough. Minimum payments alone may barely move these balances before spring.
Where there is sufficient equity and a clear exit, a serviced debt consolidation may help the client deal with the balances before December adds to them.
In the example, Tembo could review a second mortgage of about $45,000, including costs. With the $470,000 first, that is about $515,000 against an $850,000 value, or roughly 61% combined loan to value, below the 65% to 70% that is typical for Tembo’s residential files.
Tembo’s funds can be directed to the creditors. The client would replace three revolving payments with one scheduled mortgage payment, and the paid-out accounts could begin reporting at or near zero. Starting in November may give the file several reporting cycles before an April renewal.
The client should not close those accounts without appropriate credit advice, and will need a plan to keep the balances low. Otherwise, they could end up carrying both the second mortgage and new revolving debt.
If a known expense is coming early in the new year, such as a property tax installment or an urgent repair, an equity take-out could cover it so the cost does not land on a card that was just paid down. Adding $15,000 to the second would bring the combined loan to value to about 62%.
Every application should begin with the exit. Here, it is the spring renewal: if the updated profile supports it, the broker may be able to refinance with the bank and repay Tembo from the proceeds. If the file needs more time, the exit could be a later refinance, a sale or another reliable repayment source.
Tembo has No Minimum Credit Score. Approval rests on the equity in the property and on whether the exit makes sense.
For a bank-focused broker, Tembo provides the short-term step. The bank remains the destination.
A short call might sound like this:
“Before the holidays get busy, I wanted to check in. Your mortgage renews in the spring, and a lender may look at your credit as it stands then, which could include December’s balances. Could we take ten minutes to go through your cards and lines of credit, any buy now, pay later plans and anything new you are thinking of opening? If the balances are already higher than you would like, there may be ways to deal with that now rather than in March.”
On the call, it may help to ask:
None of the five points is complicated. The value is in the timing and in who delivers it.
A client who hears this from their broker in November has been given something useful. The same client hearing it in March may have been given an explanation for a decline.
The broker who has this conversation every November can become the person clients check with before a financial decision, not after it. That is often where the next file begins. Be proactive, help your clients and set yourself up for their next deal.
Have a client carrying high balances into the holidays? Call Tembo Financial at 416-238-6717 or visit www.tembofinancial.com, and let’s see whether there is a path forward before December.
This scenario is illustrative and does not represent a guaranteed credit-score increase, approval, timeline or funding outcome. Credit scores are determined by credit bureaus and lenders using proprietary models.
All applications are subject to Tembo Financial’s underwriting criteria, satisfactory documentation, property review, available equity and fulfillment of all funding conditions.