Lloyds TBS with high credit limit.

Dreamer80

Hi Everyone,

Newbie with a question that I hope you can help with.

I have a LLoyds TSB platinum credit card with a credit limit of £15,000. I currently have approx £1300 on it (and has never been more than £2000).

I hope to apply for a mortgage in a couple of years and my question is would having all this available (but unused credit) go against me?
And if so, will the bank lower my credit limit without it having any negative effect on my credit score/status?

I currently don't work as I have two very young children so the fact that I have this huge limit seems a bit crazy :eek:

Thanks in advance for any advice!

izools

Mortgage applications are scored very differently to credit card or loan applications.

They will look at affordability in a different way, knowing full well that they are considered a "priority" debt, so it is irrelevant to them if you rack up a massive credit card bill you end up defaulting on, as the amount you are allowed to offer your credit card company has to be calculated from what you have left after paying for utilities, food, and of course mortgage.

Still, I would ask for it to be reduced anyway. That is a potentially very dangerous limit to have given your circumstances. It shouldn't affect your credit score atall as long as you request it to be lowered to around three time your current debt - so £4,000 should be about right. And more importantly, affordable (ish) should you max it out.

CannyJock

Dreamer80 wrote: »

I hope to apply for a mortgage in a couple of years and my question is would having all this available (but unused credit) go against me?

You may find this guide to stoozing and mortgages relevant http://www.stoozing.com/a_mortgage.htm

A few stoozers have had discussions with underwriters regarding remortgage deals where the underwriters made it clear that they knock off an amount from the amount they will loan based on available credit - large amounts of available credit can affect their affordability calculations.

Discussion on it here http://www.stoozing.com/forum/YaBB.pl?num=1263832608/0#0

jonesMUFCforever

I have recemtly applied for a mortgage - the application did not ask for the limits on my credit cards merely asking for outstanding balances.

izools

jonesMUFCforever wrote: »

I have recemtly applied for a mortgage - the application did not ask for the limits on my credit cards merely asking for outstanding balances.

They still know and take it into consideration when they do a credit check...

CannyJock

jonesMUFCforever wrote: »

I have recemtly applied for a mortgage - the application did not ask for the limits on my credit cards merely asking for outstanding balances.

Interesting because obviously there's nothing stopping you from going out and spending it all as soon as the application is processed (apart from common sense).

Dreamer80

Thank you for your replies. I'm going to reduce the limit to £5000 as I wouldn't ever spend £15k on it! I wouldn't be able to afford the interest on £15k never mind the repayments!!

:beer:

izools

A very wise move. Give yourself a pat on the back