What exacty constitutes "utilisation"?

wysiwyg1987

(Sorry if this has been answered before - I searched and couldn't find it.)

Does anyone know exactly what does and doesn't count towards "debt utilisation" e.g. which types of financial account?

- Mortgages I know don't count.
- Credit cards obviously count.
- Overdrafts presumably count?
- (Unsecured) personal loans...?

With the nature of a personal loan being fixed payments towards an initial amount rather than a credit limit, I'm not sure if this will be counted as "utilisation" in the same way a credit card would?

Many thanks

Tixy

Are you asking how it would be defined by a potential lender? or something else?

A potential lender, when making a lending decision will take into account all your existing unsecured debts, all your existing commitments inlcuindding your mortgage, your income and any unused credit you have available to you (such as credit cards/overdrafts/revolving loan facilities etc).
They will of course also take into account your credit history and other financial information you provide to them.

wysiwyg1987

Yes, sorry I wasn't very clear. I'm asking how lenders look at it.

For example if you have credit cards with total £9000 balance of £10000 limit, that's 90% utilisation and a potential red flag - but is owing £4850 on a £5000 loan (because it's only a month old) going to be factored into that same calculation?

Tixy

A lender will consider the current balance on the loan and the monthly repayment you are committed to on it. How much the original loan was won't be factored in to any affordability calculations.