Available Credit Question

bedhair

Good Morning Experts
I have a question that hopefully you experts can help with.
When your debts decrease due to you paying off the balance on credit cards, is it best to:
a) decrease the limit on the cards (reducing the available credit) or
b) leave the limits as they stood (thus leaving lots of available credit?
Which is looked on as favourable by banks?
The reason for asking is that I want to take out a money transfer card (0%) to pay off the overdraft and want to look favourable by credit companies.
Thanks in advance for your advice.

bengal-stripe

bedhair wrote: »

Which is looked on as favourable by banks?

Utilizing a smaller percentage of your available credit is always a good sign.

Unless your available credit, on all your cards combined, is absurdly high (let's say, higher than your annual salary), I would just leave it.

grumbler

Reducing limits results in smaller [STRIKE]available/used[/STRIKE] available/income ratio, but higher used/available one.
It's believed that ideally both have to be below 50%.

cse

Reducing limits results in smaller available/used ratio, but higher used/available one.
It's believed that ideally both have to be below 50%.

How is that even mathematically possible?

Mirno

I think grumbler means income to available ratio, and available to used ratio - both below 50%.
i.e. To use credit up to about a quarter of your income looks best.

The numbers aren't set in stone, and different credit providers target different people so will shift these (and other factors) around to help get the demographic they want.

molerat

I had a credit limit of 175% of my income.
I had an average rolling utilisation of 10% of that limit.
I applied and got another card bringing my available credit up to 200% of my income.

Go figure

grumbler

Mirno wrote: »

I think grumbler means income to available ratio,

Available to income actually as it has to be low, not high.