Do credit card limits (not balances) affect mortgage availability?

KPiG

Sorry for all the questions! This one just occurred to me when reading another thread.

I have 2 credit cards with limits of £4,000 each.

I am nowhere near my credit limit on either of these, but would the fact that I could potentially run up £8k of debt be a warning flag to potential lenders, especially as I am earning much less now than I was when the credit limits were set?

Just trying to find ways of improving my chances of getting a mortgage and thought that voluntarily reducing my available credit might help.

Thanks

KPiG

ACG

Depends on your income as to how much effect it will have. In answer to your question though yes it will have soem effect on it.

mr_flibble

Interesting question. I wondered the same thing but as I have a balance a reduction would increase the percentage of credit used as compared to available would that not look bad?

eh2nt

In the affordability calculations lenders tend to use the amount outstanding rather than limit.

For marginal cases it actually looks worse if balances are upto limits so the fact that you have plenty of available limit suggests to me that you are living well within your means and i would say that this is a plus.

Thrugelmir

Why have more credit available than you will ever need?

Those that score on it, will only ever use it negatively.

As there's nothing positive.

holly_hobby

Lenders do look at the total access to rolling credit post completion that an applicant has, in comparison to income, and in addition of course to o/s balances, and payment profile history - this is due to the negative imact on disp income that increased debt repayments by increased balances will have, and the possible resulting effect on servicing the mge.

I have known cases be rejected due to the amount of rolling credit available to the applicant, so it is a factor considered during the underwriting and credit scoring process. (solution normally by the proposition of the individual to voluntarily close off unused credit facilities).

Hope this helps

Holly