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Should I reduce the limit on my credit card? (regarding Lloyds personal loan)
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I am banking with Lloyds and recently applied for a credit card in order to raise my credit score as I heard that helps. They approved me and gave me a £6000 limit.
Now I am a bit worried that perhaps they gave me a too big limit as I am hoping to take a large personal loan in the near future for home improvement (for £18000) for a home that I am about to buy with cash. The home will require renovation before moving in, but it is priced very well.
I was hoping to get this personal loan, because Lloyds has an online quotation and I was told that I can borrow up to £25000. I was told the same in my local branch recently, they said they are not 100% sure, but it seems like I could get this personal loan.
However, now that I got this credit card with a £6000 limit am I not a bigger risk? What would you do in my position? Would you ask my bank to lower my credit limit on my credit card to £1000 or is it not worth it? What I am wodnering whether possesing a credit card with a limit of £6000 can rather increase or decrease the chance of receiving a personal loan from the same bank (in this case Lloyds). I am not sure how it works and I would be really grateful for some advice before I contact my bank and talk to them about it.
Now I am a bit worried that perhaps they gave me a too big limit as I am hoping to take a large personal loan in the near future for home improvement (for £18000) for a home that I am about to buy with cash. The home will require renovation before moving in, but it is priced very well.
I was hoping to get this personal loan, because Lloyds has an online quotation and I was told that I can borrow up to £25000. I was told the same in my local branch recently, they said they are not 100% sure, but it seems like I could get this personal loan.
However, now that I got this credit card with a £6000 limit am I not a bigger risk? What would you do in my position? Would you ask my bank to lower my credit limit on my credit card to £1000 or is it not worth it? What I am wodnering whether possesing a credit card with a limit of £6000 can rather increase or decrease the chance of receiving a personal loan from the same bank (in this case Lloyds). I am not sure how it works and I would be really grateful for some advice before I contact my bank and talk to them about it.
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Comments
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How much do you earn? Do you have any other debt? Will the loan be secured on the property?0
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As a self-employed my income varies very much, usually it is less than 20k, but last year it was 50k (but income will probably drop soon so that is why I want to apply for the loan now).
I don't have any credit or loans anywhere. I just got this credit card but didn't use it yet.
The loan would be unsecured.
What I am wondering whether having access to possible debt (such as owning a credit card) usually reduces the chances of an unsecured personal loan or not. I will also ask my bank about it, but would be great to have some second opinion before I talk to them.0 -
As a rule of thumb, lenders won't lend more than 50% of a person's income. So yes, having access to £6k will have an impact on further borrowing. That said, your fluctuating income will also negatively impact on any loans that will be offered.
How do you intend servicing such a large loan, assuming your application is successful, if you know your income is going to decrease?0 -
the amount of the card you have used are mainly what lenders look at.
if youve used nothing then 6k is fine, or you could reduce it depending on what you plan on using the card for?0 -
the amount of the card you have used are mainly what lenders look at.
if youve used nothing then 6k is fine, or you could reduce it depending on what you plan on using the card for?
Wrong - the lender's will consider total available credit. Available credit isn't rated as highly in calculations as used credit, but it is still factored into the lender's calculations.0 -
Wrong - the lender's will consider total available credit. Available credit isn't rated as highly in calculations as used credit, but it is still factored into the lender's calculations.
Not wrong. Yes they will consider total available credit but since it is 6k not 56 then it won't matter very much to them.
What will matter is if he were to reduce the limit to 2000 and use 1900 then it would appear bad but 1900 on a 6000 card wouldn't0 -
Not wrong. Yes they will consider total available credit but since it is 6k not 56 then it won't matter very much to them.
What will matter is if he were to reduce the limit to 2000 and use 1900 then it would appear bad but 1900 on a 6000 card wouldn't
Still wrong I'm afraid.
Yes a lender would give slight consideration to the fact that there was only 30% credit utilisation rather than 95%.
However, a far higher factor would be given to the individual having £6000 available credit rather than £2000. This would mean that the applicant would have to earn an extra 8000 to be considered for the loan they wanted.0
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