Credit Limit upped should I reduce?

scotticus_2

Hi,

I've been hacking away at my debt for 2 years now and recently cancelled my virgin credit card. This left me with 1 loan, 1 egg credit card (which be paid off finally end of this month) and a barclaycard holding £5000 ish.

A month after cancelling my empty virgin card to avoid having access to to much credit, which can harm credit ratings, Barclaycard have automatically shot up my credit limit from 7,000 to 10,500!

Would it be a good idea to lower this limit or would asking for it to be lowered decrease my credit rating in anyway? I've read some conflicting stuff online about this .

Degenerate

scotticus wrote: »

I've read some conflicting stuff online about this .

That's because there is no clear answer. Different companies have different credit-scoring policies and will look at your position differently.

That said, I wouldn't do anything. Barclaycard tend to be one one the stricter lenders, if they saw fit to increase your limit then it would suggest you are considered credit-worthy and I doubt the extra will give you problems elsewhere.

Jigga

As Degenerate has said, it’s difficult to tell.

Re the limit increase, it may just be coincidence following ditching the Virgin card as I recently got a significant increase from Barclaycard without any other changes in my other cards and so did another poster here: https://forums.moneysavingexpert.com/discussion/2775908=

On the forum we often read that card operators take action in tranches, such as many people get rate jacked all at the same time or lots of people find their limit cut all at the same time. Perhaps for some reason Barclaycard are going through a period of increasing limits for selected accounts.

izools

If you ask Barclaycard to reduce your limit you will no longer be entitled to automatic limit increases but can still apply for them on the website or by calling up.

This should be detailed in a recent letter you got from them about them no longer doing credit card cheques and other such changes to the T&C? I got it last week just before I closed my account with them, so I guess you should have too or will soon.

Having a lower credit limit is good if your balance remains under 33-50% of that limit.

Having balances close to the limits of your cards can have a severe negative effect, however having limits tallying up to close to your annual income can also have a negative effect.

As long as you keep your balances to under 33-50% of your limits, and the total limits across all your credit accounts to under 33-50% of your annual income the affordability aspect of your credit score is likely to be perfect.