Does Reducing Credit limit have negative impact on credit rating?

oasis1979

Does Reducing Credit limit have negative impact on credit rating - I was told it could by MBNA when I tried to reduce the credit on my credit card

anyone advise?

ahxcjb

oasis1979 wrote: »

Does Reducing Credit limit have negative impact on credit rating - I was told it could by MBNA when I tried to reduce the credit on my credit card

anyone advise?

No, that's nonsense. If you have TOO MUCH credit, lenders could score that against you.

Cash_Flow

ahxcjb wrote: »

No, that's nonsense. If you have TOO MUCH credit, lenders could score that against you.

When you reduce a credit limit the reduction is recorded on your credit file, unfortunately though it does not specify whether the limit reduction was done by the card holder or lender.

This can make other lenders nervous when it comes to offering you new credit lines as it raises the question why was the limit reduced.

It will also if you also have balances elsewhere, increase your overall credit utilisation which is another element of credit scoring that lenders look at.

So "nonsense" is not the best way to describe the advice that was given to the OP by MBNA.

If I'm looking to reduce my available credit I tend to close accounts rather than reduce limits.

oasis1979

Cash_Flow wrote: »

When you reduce a credit limit the reduction is recorded on your credit file, unfortunately though it does not specify whether the limit reduction was done by the card holder or lender.

This can make other lenders nervous when it comes to offering you new credit lines as it raises the question why was the limit reduced.

It will also if you also have balances elsewhere, increase your overall credit utilisation which is another element of credit scoring that lenders look at.

So "nonsense" is not the best way to describe the advice that was given to the OP by MBNA.

If I'm looking to reduce my available credit I tend to close accounts rather than reduce limits.

ok I understand, thanks for your time

Hazzinho

Reducing limits is pointless unless you can't control you self, you will reduce the balance to limit ratio of your credit. As the previous poster mentioned the only limit reduction worth doing is when settling accounts.