Reduced balance and credit check?

Alys

Hello everyone I was wondering if anyone could help me with this? I have been diligently paying off my card with Lloyds TSB (from £7500 to £1300) was planning to ask them to reduce my credit limit to around £2000 in the near future. However, today I received a letter saying that they had reduced my limit to £1350 - which leaves me no available credit at all really.

I called them and spoke to a young man who did not give me much confidence in his knowledge, hence my question to all of you, who said that they had done a credit check on me and had "probably found something" that made them want to reduce my limit. He also then went on to say that I may not have known my credit limit and them reducing it was a fraud prevention measure.

Will TSB really have done a credit check on me? Even though I had asked for no additional credit? I assume my agreement with them must allow this if so, but it still peeves me as we're looking to apply for a mortgage soon and I had been careful not to have any searches showing up. I've had a look at my experian file and can see no search and there's nothing on there that I can see that would cause them problems credit wise. I don't really understand his comment about fraud either?

[Deleted User]

No. They've reduced your limit to reduce their own exposure. If your current spending doesn't justify that high a limit, they'll reduce it, just in case you (and thousands of other pople) suddenly rush out and spend up to the max, which their own borrowing won't allow for.

Fraud is a bit of a catch all reason, as in "well, you don't need that limit sir, so no point in having it hanging around in case a ne'er do well gets hold of your card and blows it all on crack and Blazing Squad CDs, so we'll take it away for safety. " Sounds ok, but not really a key driver of their actions.

Won't affect your mortgage app - if anything, will help it as you have less available credit.

Alys

Thanks so much for your quick reply. So it's unlikely that they've done an actual credit check on me and is maybe just a case of them having looked at their own records? I tried to establish that with the young man I spoke to but I'm not convinced that he knew the diference...

[Deleted User]

I think your interpretation is correct. He probably didn't know the difference. But without doubt, they said "Right - get me a list of everyone who has £3k or more unused credit that they never use, and reduce their limits to current balance plus a few quid." If you're managing your account ok (ie making payments, not going overdrawn and not spending it all at Foxy Bingo) then they won't use external data.

Alys

Thanks again ZX81, you helped put my mind at rest.