Credit Utilisation - which accounts?

SeduLOUs

Hi there.

I'm working on building up myself and partner's credit history to as close as 'ideal' as anyone can guess, with a view that we will be looking for a mortgage in a year or two.

Re credit utilisation, I'm never quite sure exactly what this means or what figure we should be aiming for.

At the moment we have average credit utilisation of around 60% of our credit cards (this is coming down steadily and is mostly 0% balance transfers now), but if we include available credit for catalogue accounts like Very/Jacamo etc, then our utilisation is more like 30%.

I have in my head that I want to aim for 15% utilisation - does this seem like a good figure?

Which figure should I be trying to get there with? Just the credit cards, or total available credit? Or is this another one of those things that depends on the lender and really it's anyone's guess as to what they look at?

Many thanks for any guidance you can offer.

[Deleted User]

It depends on the lenders.

But the general point is that if you use all (or a large majority) of all the credit available to you, it can look as if you are dependent on it.

SeduLOUs

Deleted_User wrote: »

It depends on the lenders.

But the general point is that if you use all (or a large majority) of all the credit available to you, it can look as if you are dependent on it.

Yes I understand that completely, and as it stands we are using a majority of our available credit if you only look at cards, but a minority if you take all available credit into account.

I'm wondering if anyone has an idea which of my two figures (60% or 30%) are likely to be the most relevant?

I guess in view of a mortgage it's just the lower the better, but I don't want to reduce it 'too much' and have too much available credit that I might prevent myself from accessing other decent cards.

[Deleted User]

I would focus on the cards and ignore the catalogues. Try to get them below 50% and lower if possible. Keep your limits as they are until the balance are very small.

Whether it's then better to lower your limits depends on the amount and your income.

SeduLOUs

Thanks zx.

CC debt is being worked on currently so I'll try and get that closer to 30%. Ideally I want to clear them all completely, and then will only keep open the cards we actively use for everyday spending (and pay in full). I don't think we can clear the lot in 12m but can certainly try!

Our total available credit (on cards only) is about 30% of our annual gross income - does this seem a sensible number? This is high-ish limits on 1-2 cards each as opposed to multiple cards with low limits.