Revolving Credit

angel00079

I need to pay off an interest only mortgage in the next few months. At the moment I don't know if the current lender will offer me anything (only just sent off income and outgoings to them). For this reason I have started to think of a backup plan.

I have available credit on credit cards and a cushion for higher repayments. Rather than do it this way which will be expensive and potentially risky I thought of trying to get a loan. Probably a secured loan as have second property (owned outright and no finance against) being renovated which is not quite ready for the market. The loan would be approximately 15% of value. If I had have been smarter I would be in a better position by now but no use crying over spill milk.

I have cards with 0% that are paid regularly. I also have a card for purchases which is paid off each month (I probably don't need this). I have cards that I don't use and they really don't offer me anything, no promotional rates etc. and I was thinking of getting rid of these as I believe they may have influence of future credit.

In the last few years I have tried to get balances down but getting extra cards for balance transfers but haven't got rid of the old cards. I just don't use them. I suppose I keep them just in case but haven't used for years. I don't need a card for purchases and could just as easily use debit card. I got turn down for Nationwide in January, only wanted for extra period of balance transfer.

I have been reading MSE:

"While cancelling available credit is likely to be a bigger boost to your credit score, by spending on a card and repaying in full every month to avoid paying interest, you can improve how lenders rate you."

"Jettisoning old cards instantly means you have access to less 'available credit'. This acts as a boost to your credit score; it tells lenders there is less risk of you running up big balances on multiple cards and becoming over-indebted."

I feel a bit in a catch 22 situation. I may not get loan because of extra credit but if I don't get loan I may need this credit.

So my idea was rather than getting rid of the cards I will decrease the limit to low value. I would use for purchases and repay each month. My thinking being if worse scenario I can't get a loan there may be opportunity (no guarantees) to increase again. On the other hand would this be issue because the cards aren't actually closed. Would that mean I have less revolving credit? I thought the post should go in the credit card section as it relates to CC but I understand the implication is wider.

CLAPTON

how much non mortgage debt do you have
how much mortgage debt
how much available credit
how much is your income

angel00079

It is not quite as simple as just me being involved. From a personal view needing about £4000 credit for my share of repayment.

Non mortgage debt - £7500
Mortgage debt - £14000
Gross Income - £21,000

Non mortgage debt
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Balance Credit Limit
Card 1 - 3500 3750
Card 2 - 3000 3800
Card 3 - 0 2600
Card 4 - 0 3650
Card 5 - 1000 1350
Total - 7500 15100

Further reading would suggest that perhaps credit limit is too high as ratio to income and there is the possiblity that balance is too near limit on cards.

JakeGreen

Non mortgage debt - £7500

Gross Income - £21,000

Non mortgage debt
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Balance Credit Limit
Card 1 - 3500 3750
Card 2 - 3000 3800
Card 3 - 0 2600
Card 4 - 0 3650
Card 5 - 1000 1350
Total - 7500 15100
[/QUOTE]

Your utilisation is just under 50%.

Try to bring it down to under 30% by either reducing the debt or increasing your available credit.