The usage of your available credit indicates a higher risk

lithium147

After closing virgin money account, I received a negative indicator on my credit report:
"The usage of your available credit indicates a higher risk"

I thought closing an unused account might have a positive impact and allow me to get more credit. But it has back fired.
Has anyone else experienced this?

What ratio of debt to available credit will remove this indicator.
Currently my ratio is 61%

pqrdef

You can't win with the agencies. They'll also say that too much credit indicates a higher risk.

But you don't know what real lenders will look at.

Unused credit, if it's been there a while, gives the impression that it doesn't burn a hole in your pocket. New unused credit may not give the same message. But your history is still on the file, so they can see you've had unused credit in the recent past, if they want to look.

andy213

lithium147 wrote: »

After closing virgin money account, I received a negative indicator on my credit report:
"The usage of your available credit indicates a higher risk"

I thought closing an unused account might have a positive impact and allow me to get more credit. But it has back fired.
Has anyone else experienced this?

What ratio of debt to available credit will remove this indicator.
Currently my ratio is 61%

yes I have, and I have to say if you learn a trade or a new job there are rules, so you get better with time, but in the murky world of the credit agencies they do not disclose their witchcraft because they know it makes about a much sense as Russel Grant's old column in the sun. They want you addicted to their credit score, it reminds me of that old Greek legend king Sisyphus who pushed a rock to the top of a hill for his punishment, he nearly made it, then the gods tumbled it back down.

in my experience leave old accounts with a limit on empty or with a quid balance, reason - they (Experian) love percentages, what they'll do is take your old limit, add your current debt and as the old limit is part of the denominator on their equation but only other debt is the numerator, then you are up

the whole thing is counter intuitive, I nearly asked for a reduction of a credit limit once, it is sensible, I wasn't using the limit, I thought - this will improve my respectability or what have you

but it wouldn't, say if I had 1k on a 10k limit, one card with 2k I didn't use and no other debt, that'd be 1/12, but if I said "5k is enough for me "....it'd be 1/7.....and i cancelled the dormant card.....1/5

so the most sensible option in this example, would more than double your problems in that area.

the further I look into experian the more I feel as if my entire upper body is submerged into an open cess pit

callum9999

andy213 wrote: »

yes I have, and I have to say if you learn a trade or a new job there are rules, so you get better with time, but in the murky world of the credit agencies they do not disclose their witchcraft because they know it makes about a much sense as Russel Grant's old column in the sun. They want you addicted to their credit score, it reminds me of that old Greek legend king Sisyphus who pushed a rock to the top of a hill for his punishment, he nearly made it, then the gods tumbled it back down.

in my experience leave old accounts with a limit on empty or with a quid balance, reason - they (Experian) love percentages, what they'll do is take your old limit, add your current debt and as the old limit is part of the denominator on their equation but only other debt is the numerator, then you are up

the whole thing is counter intuitive, I nearly asked for a reduction of a credit limit once, it is sensible, I wasn't using the limit, I thought - this will improve my respectability or what have you

but it wouldn't, say if I had 1k on a 10k limit, one card with 2k I didn't use and no other debt, that'd be 1/12, but if I said "5k is enough for me "....it'd be 1/7.....and i cancelled the dormant card.....1/5

so the most sensible option in this example, would more than double your problems in that area.

the further I look into experian the more I feel as if my entire upper body is submerged into an open cess pit

Why would you care what Experian think? I'd never consider arranging my finances to suit a credit reference agency - they don't lend out money so will have zero input into whether your score is good or not. They are simply making an educated guess (which you could just do yourself and not pay them for!).