Credit Utilisation

marathonic

Does anyone know what level credit utilisation tends to have significant impact on credit card applications for the purposes of balance transfers.

I currently have total credit available of 17% of my salary, not including mortgage. The pre-checker on MSE gives me a 10% chance for most cards with 20% for some.

My current credit is split among an interest free deal ending in December and a card with which the full balance is paid off monthly. Therefore, I'm not paying any interest for now.

I want to get into a good position for a balance transfer in December so need to start working on it now.

My reasons for such a low chance cannot be related to missed payments or anything, as there are none. It'll be one of the following two reasons:

• A number of credit applications in the past three months, including a First Direct account with overdraft and a Three Mobile phone contract;
• High credit utilisation

The first issue above can only be resolved through time, and I'm sure it'll be less significant by December anyway.

The second issue is probably the more significant factor. As of my latest report, my credit utilisation across credit cards and overdrafts was 78.6%. I don't know what the 'magic number' is but, this month, it will reduce to 65.8%.

Does anyone have any insight into whether 65.8% is low enough? I can reduce it further, to below 60% by December.

YorkshireBoy

It's not all about percentages.

If you're prepared to say, what's your:

Income
Credit limit and debt on each card
Overdraft limit and debt and how many accounts

Some other points:

How many recent credit applications, and for what products?
ER status?
Times (with employer, at address, with bank)?
Financial associates?

marathonic

YorkshireBoy wrote: »

It's not all about percentages.

If you're prepared to say, what's your:

Income
removed

Credit limit and debt on each card
Card 1: 2995/3000
Card 2: 621/1000 (cleared today)

Overdraft limit and debt and how many accounts
Halifax: 0/100
First Direct: 0/500

Some other points:

How many recent credit applications, and for what products?
Three Contract, Halifax Current Account, First Direct Current Account (all accepted)

ER status?
Enrolled

Times (with employer, at address, with bank)?
Employer: 8 years
Address: 1 year
Bank: My long-term bank isn't on my credit report and don't do balance transfer deals so Halifax has been open 6 months. My salary goes into it but they don't allow transfers from my current card.

Financial associates?
None

I've supplied answers above. I'm more looking for things I have control over and can do to increase my chances as opposed to reasons that I won't be accepted. For example, I'm only at my current address 1 year, but there's nothing I can do to resolve that.

YorkshireBoy

Although your salary is decent, the fact that you're using all but a fiver of the limit will be viewed extremely negatively by all lenders.

Also, if you're generally spending (and repaying) £600-£1000 a month on the other card then this too, as a snapshot in time, will be viewed similarly negatively.

Re the time with bank question, you can still truthfully answer the application form question (which is why I asked, rather than going to them for a card), even though it doesn't show on a credit report.

You really need to find a way of making a big dent in that £3K debt on card 1 at least a month before making an application.

One other option is to fire off a couple (or maybe 3) simultaneous applications in the hope that one or more acceptances will give you a total sufficient to take on the debt. However, this will trash your credit rating for several months.

Good luck!

marathonic

YorkshireBoy wrote: »

You really need to find a way of making a big dent in that £3K debt on card 1 at least a month before making an application.

One other option is to fire off a couple (or maybe 3) simultaneous applications in the hope that one or more acceptances will give you a total sufficient to take on the debt. However, this will trash your credit rating for several months.

Good luck!

Thanks YorkshireBoy.

The £3K debt is interest-free but I'll probably be able to have card 1 still cleared and the £3K debt brought down to £2,500 by December.

I'd considered the second option as well but, this time next year, I'll be looking into remortgaging. I know current searches fall off after 1 year so I'll have to consider this over the next few weeks.

The most likely route I'll take is to do the soft search on Barclaycard and Nationwide and, depending on the results of those, possibly try a full application with Lloyds or First Direct.

YorkshireBoy

marathonic wrote: »

I'll probably be able to have card 1 still cleared

If you continue to use it though, it'll continue to show a balance each month on your CRA report, so I assume you'll not be using it?

and the £3K debt brought down to £2,500 by December.

83% utilisation on one card is still very high though.

I'd considered the second option as well but, this time next year, I'll be looking into remortgaging. I know current searches fall off after 1 year so I'll have to consider this over the next few weeks.

I wouldn't think 2-3 searches 10-12 months ago would make any difference to a mortgage application.

possibly try a full application with Lloyds or First Direct.

Lloyds are very picky if you don't have a current account with them.

FD may be an option though, but you possibly haven't been with them for long enough for them to make a guaranteed offer of a card yet, so would mean them credit searching you (and seeing the 83% utilisation on card 1).

marathonic

YorkshireBoy wrote: »

If you continue to use it though, it'll continue to show a balance each month on your CRA report, so I assume you'll not be using it?

I'll be using it for small purchases, such as Asda online, but will be paying it off immediately as opposed to waiting for the statement.

Edit: Actually, I can pay in advance on the £3K card before use, leaving the other card untouched.

YorkshireBoy wrote: »

83% utilisation on one card is still very high though.

Oh right, I'd thought they looked at your overall utilisation as opposed to the utilisation on each card. Will have to have a look at my budget - perhaps reducing it to 79% in the hope that 80% is one of the thresholds looked at by one, or more, of the card suppliers.