Credit limit increase. Should I?

FOXGLOVE_2

I have a Capital One platinum card, the interest is pretty high and I am aiming to pay off the £500 balance in the next few months. I have been making overpayments each month to bring the balance down whilst rarely making purchases.

My limit has been increased a few times and this time round, I got a letter telling me my new limit will go from £1400 to £2400.

Whilst I have no plans to use it and I am currently on track to clear debt elsewhere, I am wondering whether I should decline this or not.

I trust myself not to spend on this card, partly due to the interest and also to keep my debt as low as I can. So I'm not sure if there is any reason to actually keep the limit as it is. Does it look better for me if I have available credit that I am not using?

Or if my permitted credit remains low, is it a better sign to future lenders?

I plan to look at a mortgage in about 3 years time so I want things to look good for me.

Thanks in advance.

Bad_website

Anything with a high interest I would decline. These type of products will just keep you in perpetual debt, that's what they are designed for. As for your credit file, I just don't know, you get so many replies on this website telling you one thing or another about what and what not to have on your credit file, its like an enigma. I just pay my bills on time, get rid of credit I don't use any more.

FOXGLOVE_2

Don't think I've explained properly. I already have the card, I know its high interest but not planning to max it out. Wondering if the available yet unused credit limit being there shows me as a lower risk.

MPH80

There's a balance ...

Too much available credit against your income can be considered a higher risk. Too little credit (particularly a lowering of a credit limit) might be considered worse.

Best course of action - spend regularly on the card - pay it off in full each and every time.

planteria

if it is your only card i would take the increase

but obviously just use whatever you really need

getting interest accruing debt paid off asap it essential

INT1

I wouldn't take the increase.

If you want to apply for credit elsewhere and you have more exposure to credit, you'll likely be declined.

Keep the credit limits and Bank Overdraft limits as low as possible.

FOXGLOVE_2

Elsewhere I have a £250 overdraft that I use maybe one or two days a month before I get paid.

I have old debt which is defaulted and not accruing interest that I aim to clear in the next year or so. Waiting for the default to drop off my credit file before I can look at a mortgage, obviously.

I'm considering keeping the limit as it is. I can't envisage a situation where I would have to make a massive purchase and choose to put it on such a high interest card.

jamesml

Personally I would keep it, if you trust yourself not to use it. If you were planning on getting credit elsewhere then that could be a good reason not to want it, but if you aren't then I would have thought the increased limit would make you look better in the eyes of a lender. Particularly if, as suggested, you continue to use and clear this card each month in future (once you've repaid this debt). It keeps the account ticking over nicely and I always understood it helped lenders to see you can manage credit. An increased limit means that you are automatically going to be at a lower utilisation rate.

SuperHan

I personally like to have as much available credit as possible, so tend not to decline any limit increases.

The reason for this is, in case of an unforeseen financial emergency (eg car breakdown, appliance failure etc), I won't need to scramble around trying to find a new credit card provider or turn to payday loans, as I can use the credit I already have in my name.

That said, I already have a mortgage which I am fixed in to for 5 years and I pay all my credit cards in full each month, so I am in no way concerned about how my credit file may be perceived to any lenders, as I won't be borrowing significant amounts for the near future.

Personally, I would accept the increase and then tidy your finances up a couple of months before looking to apply for the mortgage, i.e. reducing limits and closing cards then. That's in essence what I did before applying for mine.

FOXGLOVE_2

SuperHan wrote: »

I personally like to have as much available credit as possible, so tend not to decline any limit increases.

The reason for this is, in case of an unforeseen financial emergency (eg car breakdown, appliance failure etc), I won't need to scramble around trying to find a new credit card provider or turn to payday loans, as I can use the credit I already have in my name.

I intend to have the £1400 'spare' for emergencies. I don't have a car or anything that would require me to spend over £2400. The main reason I got this card was for emergencies. My father lives in the US and wanted something there incase I ever had to visit in an emergency. Obviously, I used it for day to day things when I was working part time which is why I have a balance on it at the moment.

Going through a complete overhaul of my finances and tackling debt now that my income has increased. I'm guessing I must be doing something right if I'm being offered the increase.