Which is better (or worse): reducing limits or debt to limit ratios?

pheonixrising21

sfax wrote: »

Higher limits can also increase your credit rating so it depends what your priority is. Mine is maintaining a good credit rating to aid new BT deals when they come up

There is no hard and fast rule which says having a high limit equals a good credit rating

There will come a point where you will have to reduce the available limit, either by closing accounts or reducing limits. It is inevitable. There is no way you can continue to get card after card (either for BT or purchase deals) and keep them all open (even if you don't actually use some of them). The point is that you could use them, and lenders will look at the "what if he maxes them all out tomorrow?" scenario and decide if you can afford the repayments if you did that.

That is why you need a balance of the two. IMO, if the available credit to income ratio is low, then the used credit to available credit is more important. If the available credit to income starts to rise, then this becomes a more important factor

sfax

pheonixrising21 wrote: »

There is no hard and fast rule which says having a high limit equals a good credit rating

Yep, which is why I said can not will. You need to balance both but it's worth highlighting the danger of closing cards and reducing credit limits because people may not get this limit back or may lose a credit search life in order to get it back

Hazzinho

Keep you debts low, don't reduce limits that looks potentially negative, lenders reduce limits when you're struggling and there is a fair bit of automation these days on credit checks. Just focus on your debt being under 40% of your annual income.