Is it good to have a high credit limit if you always pay the balance each month?

going2die_rich

My Question:

Is it good to have a high credit limit if you always pay the balance each month or should you limit this?

Basically I have got £3600 credit limit with Next so is this good or bad? I am never going to use but because I always make my payments it does show that I can handle this amount of credit without defaulting on payments or will I be limited to who will want me as a customer since I could lose control one day?


Story behind my question:

I recently applied for a Morgan & Stanely card, and got turned down. So I decided to get my credit report to see if I could find out why as they wouldn't give me a reason. My report seemed fine, apart from that I noticed that "Next" who I have account with have increased my credit limit from £300 to £3600!!! Even though I never asked them to do this (as £300 is more than enough). Anyway I phoned up Next saying I didn't want that much credit available but they said they couldn't lower it, which I wasn't too happy about :mad: They said it wasn't a negative effect having this shown on my report as it showed I was a trusted customer and showed I never missed any payments. (Which is true I suppose)

Anyway should I just close my Next account so that the £3600 credit limit is no longer being shown as available on my credit report or is me being declined most likely something like Morgan and Stanley cherry picking it's customers?

I just don't understand why I got turned down when I have no loans or debts and I am earning £26k along with being only 25, and always make payments and have excellent savings of around £20k (not a homeowner yet though). I thought I'd be the sort of customer banks would want since I am just starting on my career path therefore am bound to get debt sooner or later which they could make money off me on.

Hence my question, is having excess credit available to me, hurting me more than benefiting me? The people at Next said it's good because its showing they trust me with a large credit limit and since I pay it off each month it shows I can handle it, but I am not sure if this sounds true.

Anyone got any advice on this matter? :think:

The_Boss

If you earn £26k, its not the credit limit that has caused your rejection by Morgan Stanley. It could be more down to the lack of credit history.

When did you get the Next card?

Personally, having higher limits on a few card looks good if you dont spend up to your limit as you look more responsible. For someone that earns 26K, I'd say having 3 cards with £4000-£5000 on them would be the ideal maximum as you still have lots if wiggle room for future applications and having a couple of accounts will build more history (along with mobile phone accounts etc).

going2die_rich

It's just a Next account not an actual card. I have been with Next for over 2 years now. I do have a Barclaycard which I got back when I started university and have only ever been late twice in paying the minimum payment in over 5 years and that was just because I forgot rather than didn't have the funds to make the payment.

I suppose I probably do have a lack of credit history because I do normally prefer to pay in cash as it saves me having to move money around and remember to ensure I make the minimum payments.

I guess I do need to start using my credit card more and think about getting another to build myself up a credit hsitory.

Thanks for the advice Boss

samat2001

Thats rubbish about them not being able to lower your credit limit - utter rubbish. I work with credit cards (though I don't have one myself) and each account has what is called a 'pre-approved limit' - which is basically what we can increase the limit to, should a customer request it to be done (eg: you have a credit limit of £1500, and a pre-approved limit of £2000, we can increase it to £2000). They'll be trained to fob you off by trying to get you to keep a high credit limit. Threaten to leave and they'll lower it in a shot. You have the right to lower the limit.