Morgan Stanley Cut Credit Limit - Perfect Credit History :(

Moggles_2

ChloeRadshaw wrote: »

My credit limit was 5K six months ago and I voluntarily asked for this to be reduced to 2K (as I was never going to spend more then 2K a month). It's now been cut to £500! I always pay my card off in full and have been with this company for 3 years. I recently applied for the Abbey National Zero Credit Card and was turned down. I have no other credit cards [active]. I have checked my credit file and there is nothing obvious here which would cause this. Any ideas?

I would think carefully before you reduce a credit limit which is already modest, particularly if this is your sole credit card. Lowering limits can affect future applications for credit, if you overdo it.

Be aware too, it isn't always possible to re-instate some of the old limit should you change your mind later.

Bear in mind that potential lenders cannot assess the way you handle credit directly. The best indication they have is the payment history and credit limits on your existing cards with other lenders.

Other things being equal, it's better (credit score-wise) to have fewer cards with higher limits, than any number with lower limits. So, if you want to reduce your available credit in future, it's better to cancel a card completely, as Martin advises.

Cards that are closed down and marked "settled" stay on your file for six years and indicate that you have handled a higher credit limit well

Bismarck

suspect also that banks etc look into how much profit they make from the card - are they getting any interest out of the deal if it's being paid off in full?

Moggles_2

Bismarck wrote: »

Suspect also that banks etc look into how much profit they make from the card - are they getting any interest out of the deal if it's being paid off in full?

You would think so, wouldn't you? However, IME, the fact that you've made money from them, rather than the other way round, seems to have no influence whatever on card acceptance rates, credit limits and existing-customer offers you can expect.

Of course lenders may vary, in this respect, as with everything else and things change over time. It's interesting to read about others' experiences.

Moggles_2

I have Barclaycard Platinum as well as the Morgan Stanley Platinum cashback card, shortly to be renamed Barclaycard Cashback. The latter was used for all spending until this erstwhile well-run card was taken over by Goldfish and customer service went down the tubes. Though unused, I kept the a/c open in the hope things would improve. However I must be doing something right, because the combined credit limits come to more than 20k and have not been reduced :rolleyes:

Personally, I think the OP did themselves a disservice by voluntarily reducing the limit on their sole credit card by more than 50%.

A request for a lower credit limit, leaves no record on your credit file of the higher one. Those subsequently searching your credit report, see a longstanding customer with a comparatively low-limit card. Lenders know some of their competitors routinely raise credit limits over time, provided that the customer keeps to the Ts & Cs. They also know the vast majority of their customers request limit increases.

A low limit on a card held for some years could indicate a problem if it's the only card on file. If the card's in use and the customer appears to have maxed out on a low-limit card, this may signal over-commitment.

To my mind, there's no particular advantage to reducing available credit in this way. Better to cancel a card completely, as Martin advises, than drastically reduce the limit

Bismarck

Moggles wrote: »

You would think so, wouldn't you? However, IME, the fact that you've made money from them, rather than the other way round, seems to have no influence whatever on card acceptance rates, credit limits and existing-customer offers you can expect.

Of course lenders may vary, in this respect, as with everything else and things change over time. It's interesting to read about others' experiences.

it really is unfathomable sometimes...however, what's done is done.....

ChloeRadshaw

One of the reasons I cut my credit limit was to prevent a big loss in the event the card got stolen / lost (and also to prevent horror stories which I ve seen on this forum regarding lap dancing clubs and spending 4K in one night).

Whats now strange is I ve applied to the Halifax credit card and also immediately got refused - I m going to get a copy of my credit file first thing tomorrow although something is not right as I m on 50K, single and never missed a payment before

Moggles_2

ChloeRadshaw wrote: »

One of the reasons I cut my credit limit was to prevent a big loss in the event the card got stolen/lost ...

Well, there's risk attached to everything but, in general, credit cards are the safest way to purchase goods/services. If you carry cash, it could be nicked. If you use cheques, they could get altered.

Personally, I wouldn't worry. If the worst were to happen, a phonecall to customer services is all that's required to report your card lost or stolen. There's usually a dedicated freefone number for this

Moggles_2

ChloeRadshaw wrote: »

... and also to prevent horror stories which I've seen on this forum regarding lap dancing clubs and spending 4K in one night.

There's been one horror story along these lines. Again, I wouldn't worry unduly, unless you're in the habit of getting plastered before you go out for the evening.

Let us know how you get on.

Very best
M

NickX

Moggles wrote: »

There's been one horror story along these lines. Again, I wouldn't worry unduly, unless you're in the habit of getting plastered before you go out for the evening.

Or indeed getting plastered whilst you are out for the evening.

If you are intending on going to back street lapdancing clubs it would probably be best not to take credit cards and only take as much cash as you wish to spend.

That way you cannot be in a position where you have spent more than you originally intended.

granthar1

Moggles wrote: »

I have Barclaycard Platinum as well as the Morgan Stanley Platinum cashback card, shortly to be renamed Barclaycard Cashback. The latter was used for all spending until this erstwhile well-run card was taken over by Goldfish and customer service went down the tubes. Though unused, I kept the a/c open in the hope things would improve. However I must be doing something right, because the combined credit limits come to more than 20k and have not been reduced :rolleyes:

Personally, I think the OP did themselves a disservice by voluntarily reducing the limit on their sole credit card by more than 50%.

A request for a lower credit limit, leaves no record on your credit file of the higher one. Those subsequently searching your credit report, see a longstanding customer with a comparatively low-limit card. Lenders know some of their competitors routinely raise credit limits over time, provided that the customer keeps to the Ts & Cs. They also know the vast majority of their customers request limit increases.

A low limit on a card held for some years could indicate a problem if it's the only card on file. If the card's in use and the customer appears to have maxed out on a low-limit card, this may signal over-commitment.

To my mind, there's no particular advantage to reducing available credit in this way. Better to cancel a card completely, as Martin advises, than drastically reduce the limit

---

I had same problem, had £3.5 K credit limit, paid £2K off card balance to pay for a holiday and they reduced my credit limit by £2K the same day they got payment. Was not happy as then had to use savings to pay for holiday as didn't have enough credit left on card to pay for holiday.