Reduction in Credit Limit – Impact on Credit Score?

GregM1873

Hi all,


Just noticed yesterday when on Internet Banking that Halifax had reduced my credit limit from approximately £8,500 to £6,500. No warning or anything given. Balance is around £6,000.


Just off the phone to them, letter was already on its way to me apparently. They explained they review credit limits every month, which of course I understand, and that one reason for this reduction is that I have used my credit card a few times recently for withdrawing cash (lesson well and truly learned there!)


I totally understand all this, but just wondered if this reduction is likely to have an impact on my credit rating? I have not had a late payment or went over limit (not in the last 4-5 years anyway) and always pay a good bit more than the minimum monthly amount.


Cheers for any advice.

Tixy

It could affect your ability to get new credit, though it would depend on which potential new lender was looking at it as to whether it would be a good or bad impact.

On the one hand you now have access to £2k less credit, so from an affordability basis you should in theory be more likely to be able to afford to repay more new credit.

On the other on this particular card you now have a 92% debt to credit ratio rather than a 70% ratio. So it might appear that you are not managing your credit facilities as well as you might as your card is closer to being maxed out.

As no one really knows which lenders favour one over the other it would be hard to say, plus of course it will depend on the rest of your financial position anyway.

knightfox

Halifax are cutting many peoples credit limits. I think they are worried about bad debt.

poppet1711

Halifax have insisted on cutting my card by a paltry £5-10 pounds every month. It's a low limit card that I only use for the odd thing anyway,it's just annoying as it keeps increasing my debt to limit ratio!

SeanyP321

yes as said above this could well affect your score.

despite never missing a payment in my life... I have had creditors chomping at the bit to reduce my credit.

I came across 7000 which I paid off my cards, and who'd of thunk it, they lowered my limit my 9000. all of a sudden my debt ratio gets thrown out of whack, nobody cares that I have paid a large chunk of debt off and now... can't get credit.

messed up system.

powerone

SeanyP321 wrote: »

yes as said above this could well affect your score.

despite never missing a payment in my life... I have had creditors chomping at the bit to reduce my credit.

I came across 7000 which I paid off my cards, and who'd of thunk it, they lowered my limit my 9000. all of a sudden my debt ratio gets thrown out of whack, nobody cares that I have paid a large chunk of debt off and now... can't get credit.

messed up system.

which card companies was this?

SeanyP321

mainly...halifax

powerone

SeanyP321 wrote: »

mainly...halifax

yes I think they are having problems with debt issues and worried about bad debt.

SeanyP321

I would call someone who has paid their payments on time for 11 years... good debt.

powerone

SeanyP321 wrote: »

I would call someone who has paid their payments on time for 11 years... good debt.

I agree I am in the same situation. I dont really understand what they are doing. But I am aware they are doing it. It must be some sort of internal thing.

However, I dont have much experience of Lloyds. I dont know how much credit you an have on their cards. Maybe they are just covering their backs or trying to join the two companies together under one set of rules.