first post hoping someone can help me

kezzles

hi not sure this is in the right place but here goes i have several catalogs either empty or with a few hundred on one has a 5k limit but 600 spending on it if i close all the empty accounts will the credit go to be available elsewhere and does the same apply to if i called to ask the credit limit to be lowed would that extra available credit become available else where i want to put all my high interest catalogues on a 0% credit card then pay off as much as possible before the interest free ends, if anyone could help that would be amazing tia

antonia86

Hi Kezzles,


No, the limits will not work in the way you are suggesting, Each company chooses the limit they offer you based on their assessment of your relationship with them and whatever credit information they possess.


Can I ask, apologies if I am making an assumption, but are you struggling with the debt? If so it may be worthwhile explaining you situation a little more so those on the boards can offer some advice.


Welcome!

kezzles

im not struggling but i need to buy a car and refuse to buy a car until iam debt free! just looking for ways to pay it off quicker, really struggling getting anywhere with 4yr old who runs away, lies on the floor and refuses to move or kicks punches and screams her way everywhere

so do the empty accounts do no harm sitting there empty? id like to keep the credit card which is empty for emergencies until i save but everything i want rid of to take away the temptation

antonia86

Most people say that creditors (or potential creditors) look at your potential of debt amount against what you owe and your salary. If you have the limit there is the potential you could splurge it all in one day.


Whether you keep them open or not is up to you, closing will remove temptation for spending and make lower your available credit to income ratio. However this alone will not guarantee you that balance to be offered on a credit card, if you see what I mean.

FireWyrm

Antonia is more or less correct. When you apply for credit, the potential creditor will do a check on you using your CRA file from one or more CRAs like Experian to make an assessment of your credit worthiness. One of the things that they sometimes take into account is how far extended you are. Generally speaking, they will count unused credit as extended to you since you could theoretically use it tomorrow. At the same time, most creditors get very nervous the closer you get to your total credit extension equaling 50% of your income. This is a general bench mark that most seem to stick to and that is why people complain that a creditor will not give them credit even though they are only borrowing a little bit. If that little bit pushes you over the 50% threshold, the lender will balk.

It is always a good idea to close unused credit anyway, if only to save yourself from temptation, but extended and unused credit can actually harm your prospects for a loan on something you actually want. Lenders will also look at repayment history to make an assessment of your character and whether you are likely to repay. They do not look the silly '900' number which is just that, a number sold to the gullible. Most lenders have their own criteria and for instance, a mortgage company has somewhat perverse lending criteria that doesnt seem to match the reports that you see.

All that said, you cannot transfer credit from one institution to another, neither can you free up unused credit, only in so far as it lowers your loan to income ratio back down below 50% which simply makes you a slightly more attractive prospect. It doesnt guarantee a loan to you unfortunately.