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Reducing my MBNA credit limit
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CourtT_2
Posts: 1 Newbie
in Credit cards
Hi there, I'm new here and thought I'd register to ask you guys about lowering my credit limit.
I've had my MBNA card for around 5 years and recently the balance amounted to £5000.00. With an appalling 29.9% apr to deal with I applied for another credit card and transferred half of the balance. My plan is to pay huge amounts of money next year and get rid of the debt once and for all.
This has left £2500 on my MBNA card, so I thought it would be a good idea to call them and reduce the balance to around £2500. My theory being if it's not there I can't spend it.
However on speaking to them on the phone they advised against it as it could have a negative impact on my credit file. The operator said that they wouldn't attach a note to the reason why the limit was reduced, and future lenders would look at the reduction in a negative way.
Is this true? Seems a bit odd to me.
Thanks for your help in advance.
I've had my MBNA card for around 5 years and recently the balance amounted to £5000.00. With an appalling 29.9% apr to deal with I applied for another credit card and transferred half of the balance. My plan is to pay huge amounts of money next year and get rid of the debt once and for all.
This has left £2500 on my MBNA card, so I thought it would be a good idea to call them and reduce the balance to around £2500. My theory being if it's not there I can't spend it.
However on speaking to them on the phone they advised against it as it could have a negative impact on my credit file. The operator said that they wouldn't attach a note to the reason why the limit was reduced, and future lenders would look at the reduction in a negative way.
Is this true? Seems a bit odd to me.
Thanks for your help in advance.
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Comments
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There is some truth in it, can you find another zero p cent card, transfer the remainder and then close this card instead.
Ideally it seems that the available credit on your cards should be less than half your salary, and balances on those cards should be half of the limit, so a quarter of salary. If you don't exceed this, as well as not missing payments etc, then you should have a favourable view to any potential lenders.0 -
You are MBNA's dream customer, assuming you're not defaulting, of course!
The only reason they are advising you not to reduce your limit is because they want you to borrow more from them. They don't care about your well being: they care about making money. They trot out this nonsense to keep you and, hopefully, trap you into spending more.
Lenders can see your payment history, your balance and your limit on a month to month basis. It's very easy to see that you are (or are not!) in control of your credit.
You might like to call their bluff. Call back and ask for a limit reduction again. If you get the same response ask them to provide you with a full breakdown of their credit scoring process, to verify what they tell you. I suspect that they'll decline . . .0 -
Your wrong about credit cards. They are like most bank accounts. Just because the money isn't there, it doesn't mean you can't spend it. If your card limit was £500 and you had £400 on the card, don't assume a £200 transaction would be automatically declined. Instead, it could be accepted with the only different being a £12 'over-limit' charge and a dent on your credit file.
So it's just easier to keep your current limit. It also looks better that you have been 'trusted' with such a limit, but are only using a fraction of it.0 -
Ideally it seems that the available credit on your cards should be less than half your salary, and balances on those cards should be half of the limit, so a quarter of salary. If you don't exceed this, as well as not missing payments etc, then you should have a favourable view to any potential lenders.
My Credit card exposure is £26k vs Salary of £31kpa, over the last 5 months I have been approved for a £7.5k loan and Nationwide CC 0% for 20mths.
My level of Available credit has not adversely affected my ability to borrow.0 -
cash flow, what credit limit did you get with nationwide?0
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I would keep it. Once the balance is zero, you might get some good deals offered you. New cards have the best offers, but the downside is you often get low limits.
What the MBNA op said might be true, but it really does depend on what else is going on with your borrowings and the scoring methods used by other lenders when making a decision. By reducing your limit, you could look more "distressed" afterwards, as you will have less available credit. This could make it more difficult to get new credit. On the other hand, having too much credit available could also prevent you getting credit.
All things considered, as I say, I would keep the limit as it is.0 -
I think you need to choose between the impulse to spend the available credit, and the problems it could cause on your credit file.
If you have problems with self control, it may be better to lower the limit on the card for your financial safety.
But if you feel you can control it, then I would also say keeping the limit would be best.
It shows that are not stretching your limits and I think it can only look good to future lenders.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
As has been pointed out, lenders tend to like your available credit to be around 50% salary maximum, so I guess it depends how your total available credit stacks up against salary and if you plan to take out new credit any time soon.
Someone suggested taking out another 0% card to clear your remianing balance and then close the card completely. However, having £2.5k available on your card may hinder this as another £2.5k on a new card may take you over the lender's threshold.
I too have heard the suggestion that a reduction in the card limit can be viewed negatively even if you reduce it yourself as no note to this effect is placed on the account.
Maybe a compromise may be in order? How about reducing the limit to £3.5K? This removes £1.5k of the available credit, but still leaves a fairly high limit to show you can be trusted (if that does show that) and some available credit to show you are not maxed out?Santander Loan [STRIKE]£3003[/STRIKE] £2100AA Credit Card [STRIKE]£3148[/STRIKE] £2676Natwest OD [STRIKE]£1500[/STRIKE] £1370Cahoot OD [STRIKE]£1000 [/STRIKE]£650Capital One Card [STRIKE]£641[/STRIKE] £400Total [STRIKE](Jan 12)[/STRIKE] [STRIKE]£9546 [/STRIKE] £7196 (Now)0 -
Can you ask for a note to be placed on your file saying that the limit was lowered at the borrower's request? My partner has also been advised recently that lowering his limit could negatively impact his credit rating.
A while ago I had a Barclaycard and they kept putting the limit up, so I spent the extra credit. When I stopped doing this and started making large payments every month to bring the balance down they upped my limit even more so I had to tell them to put it back down again.
I agree with the previous post, the card companies don't care about your financial well being.0 -
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