Benefit in extending credit

MandM90

I've only ever had one CC, and only ever paid it off in full every month.

I was looking at my credit report on Credit Expert, and one of the factors is 'amount of available credit used'. Is there any benefit in extending (if possible!) my credit limit on my CC in order to be using a lower overall %age?

If at all relevant the card has a £2.3k limit.

grumbler

It's believed that it's worth keeping both ratios under 50%:
used/available
available/income

The latter is unlikely to be a problem with just £2.7K available.

MandM90

grumbler wrote: »

It's believed that it's worth keeping both ratios under 50%:
used/available
available/income

The latter is unlikely to be a problem with just £2.7K available.

Thanks, the former isn't really a problem either as I only use it for groceries (and I'm a tightwad so that's circa £200 for our family!)

Just pondering, but probably not worth the hassle for me!

Anthorn

MandM90 wrote: »

I've only ever had one CC, and only ever paid it off in full every month.

I was looking at my credit report on Credit Expert, and one of the factors is 'amount of available credit used'. Is there any benefit in extending (if possible!) my credit limit on my CC in order to be using a lower overall %age?

If at all relevant the card has a £2.3k limit.

That's one of the things Experian is hot on as well as the length of time your oldest account has been running. The percentage of 50% of available credit used is quite an arbitrary figure that someone somwhere has pulled out of the proverbial hat. But I have never seen that ratio confirmed as fact. But I stick to that ratio and it appears to work for me.

I would be inclined to add an extra credit card rather than increase the credit limit on the existing card. The effect of the extra card will be about the same but you will have the flexibility to transfer between the two cards and there will be another account added to your credit history.

agrinnall

Anthorn wrote: »

That's one of the things Experian is hot on as well as the length of time your oldest account has been running.

But why would anyone care what Experian think anyway? It's not as if they'll be going to Experian to ask for credit.

MandM90

Anthorn wrote: »

That's one of the things Experian is hot on as well as the length of time your oldest account has been running. The percentage of 50% of available credit used is quite an arbitrary figure that someone somwhere has pulled out of the proverbial hat. But I have never seen that ratio confirmed as fact. But I stick to that ratio and it appears to work for me.

I would be inclined to add an extra credit card rather than increase the credit limit on the existing card. The effect of the extra card will be about the same but you will have the flexibility to transfer between the two cards and there will be another account added to your credit history.

Thanks for the input, I'll get researching.

Doctor_Duke

Anthorn wrote: »

I would be inclined to add an extra credit card rather than increase the credit limit on the existing card. The effect of the extra card will be about the same but you will have the flexibility to transfer between the two cards and there will be another account added to your credit history.

Ant is that wholly true? A new credit card will be a hard search on a credit file whilst extending credit limits normally will not (mine certainly have never had a search)? I guess you have to balance this with a new card will normally have better offers, and possibly no fee depending on the card, than an existing credit card.

SnowTiger

Am I reading this wrong?:

OP's credit card has a limit of £2,000 and they spend about £200 a month with it?

I'd guess that, at most, the balance is only £400.

I don't understand why that would trigger an 'amount of available credit used' warning, unless it was suggesting too little credit is used.

It it, of course, only Experian's opinion.

Doctor_Duke

No it doesn't make sense unless there is another form of credit on the file, eg store card, loan or used overdraft do you think?

MandM90

Hi SnowTiger,

I haven't had a warning...just came across it this morning. I do have a mortgage of £217k but I'm assuming that doesn't come into it!

I would check where I found it but I cancelled it this morning after having a good nosy around.

Not planning on any credit (unless it would help my credit health) until remortgage time in just under two years, so I got rid of CE and will just pay to check the report next year.

ETA just realised my OP was a bit unclear...it wasn't a 'warning', just listed somewhere as one of the factors which dictates a score.

Anthorn

Doctor_Duke wrote: »

Ant is that wholly true? A new credit card will be a hard search on a credit file whilst extending credit limits normally will not (mine certainly have never had a search)? I guess you have to balance this with a new card will normally have better offers, and possibly no fee depending on the card, than an existing credit card.

Some lenders such as MBNA perform a new hard search when a credit limit increase is requested. But we are allowed more than one new hard search in a 6 months period you know.