MBNA - are they being truthful?

righton

Called MBNA today to reduce the credit limit on my Virgin credit card (as I simply don't need the old limit level, and looking to apply for a mortgage so looking to reduce my available credit).

They advised me that reducing my limit would have a negative effect on my credit score.

Is this right, or just the sort of misinformation that MBNA are renowned for?

izools

It depends.

If you want to reduce the limit to not much over your balance, then this might have a negative effect - if you don't have much credit available elsewhere.

Some examples:

Scenario 1

> £30,000 Salary
> Three credit cards. One with £0 balance, £2,000 limit. One with £500 balance, £1,500 limit. MBNA with £3000 balance, £10,000 limit

Reducing the limit on the MBNA card WILL have a positive effect as you are reducing your limit to income ratio to a more sensible level WITHOUT causing your overall debt to limit ratio to be very high.

Scenario 2:

> £25,000 Salary
> Three cards: £1,000 limit, £900 balance. £1,500 limit, £1,250 balance. MBNA Card £1,500 Balance, £5,000 limit

Reducing the limit on your MBNA card is more likely to have a negative effect as your balance to limit ratio will be very high afterwards - whereas leaving as is your limit to income ratio wouldn't be too high.

Did that make any sense?

righton

Hi, and thanks for your reply, that does make sense.

I have:
-card1: £8k limit, zero bal
-card2: £3k limit, zero bal
-MBNA: limit was £7,200 asked for reduction to £5k, bal of £3k

righton

Sorry, forgot to say that's on £32k income

Dabooka

Could you not just cancel Card 1 or 2 then (or both)?

Otherwise what izools has said is bang on the button.

izools

Given the limits on the other cards it will definitely have a positive effect to reduce the limit.

You may also benefit from reducing the limits on the other two, too, to ensure your total available credit is well under half your annual income

mcompton69

Sounds like they should be saying that it can have a positive OR a negative affect on your credit limit, but not surprisingly they are omitting to pass on the former information.

oki25

Hi there, be careful, it doesn't explain on your credit file 'why' MBNA (or any other provider) has reduced your credit. Other lenders will spot this when you make a new appliation in the near future and may think it was a business decision rather than customer request.