Should i lower the credit limit?

zerocool237

I was just thinking as i'm paying off my CC balance is it ok for me to keep lowering the credit limit on the card everytime i pay abit more off? does it go against you or effect your credit history?

cifpower

If your balance is close to your CL it shows that you are using a lot of your available credit and you may seem "maxed out" which can sometimes not look good.

Moggles_2

I agree.

Obviously, we don't know your annual income, but I would think carefully before you reduce your credit limits. Lowering limits can affect future applications for credit, if you overdo it.

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

In addition to the number of accounts in use, lenders look at the extent their credit limits have been utilised. Maxed out accounts make you look desperate for credit, so it's wise to leave plenty of leeway.

Other things being equal, it's better (credit score-wise) to have fewer cards with higher limits, than a clutch of cards with lowish limits. So, if you want to reduce your available credit, it's better to pay off the balance and 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 can handle a decent-sized credit limit well

zerocool237

Ah right, i see what you mean!

My limit was at 15K then recently i brought it down to 12.5K but i could now bring it down to 10K but if they see it like you say then i might leave it a bit and reduce later but always leave a healthy gap between the balance and CL!

... i will probably do some more refinancing soon aswell so it may get reduced alsp at that time!

Thanks