Barclaycard Credit Increase

Kreacher

Hi all,

So I've had my barclaycard for around 7 years. When I was at uni, I used to spend on it at the end of the term whilst I waited for my student loan and often got charged interest as I only made minimal payments. For the past year however I have only been using it for spending I can actually afford and paying it off every month in full.

Over the years they have sent me letters to inform me that they are increasing my credit limit and I've always allowed them. My partner and I have been saving very hard and will probably be in a position to apply for a mortgage in around 15 months time.

I received another letter from Barclaycard this week telling me they were going to increase my limit again from £7400 to £7800. (This is my only credit card and I don't have any other debt excluding my student loans).

My question is - should I always accept the credit limit increases? Do they effect my credit score? Is it better to have a large credit limit or a small credit limit? Will my credit limit effect my chance of getting a mortgage?

Thanks

[Deleted User]

Depends.

It's a very small increase. But how does it compare to your income? How much do you typically use of the limit?

It's unlikely to have any impact on a mortgage application. But you may be better advised to have more than one card, and then manage the limits across the two appropriately.

Kreacher

Deleted_User wrote: »

Depends.

It's a very small increase. But how does it compare to your income? How much do you typically use of the limit?

It's unlikely to have any impact on a mortgage application. But you may be better advised to have more than one card, and then manage the limits across the two appropriately.

Thanks for the quick reply. My salary is 34k, I probably only spend around £400 - £1000 on it in a month (sometimes my partner and I use it for joint purchases and then he pays half).

Why would it be better to have 2 cards?

My main concern in mortgage applications. Do they see it as a risk if I can quickly access so much money? Or do they see it as a positive that I can access the money but don't?

[Deleted User]

I would let the increase happen. It's low compared to your income. There's no exact science but you want to -

have a limit

• high enough that shows lenders trust you
• low enough limits that others will still be prepared to lend to you more should you need it (eg for a BT)
• don't get close to using your whole limit (or it looks as if you are desperate for every penny of your credit)

Two cards will give you options for when one gets declined or closed. It will also show that you're not stuck with just one lender being willing to accept you.

You'll also find that different cards can serve different purposes - cashback, free foreign exchange, purchase offers etc.

Kreacher

Deleted_User wrote: »

I would let the increase happen. It's low compared to your income. There's no exact science but you want to -

have a limit

• high enough that shows lenders trust you
• low enough limits that others will still be prepared to lend to you more should you need it (eg for a BT)
• don't get close to using your whole limit (or it looks as if you are desperate for every penny of your credit)

Two cards will give you options for when one gets declined or closed. It will also show that you're not stuck with just one lender being willing to accept you.

You'll also find that different cards can serve different purposes - cashback, free foreign exchange, purchase offers etc.

Perfect, thanks very much for your help.

I was contemplating applying for a Halifax clarity card for the good foreign exchange rate for a few trips I'm taking this year, but again was unsure if having multiple cards would be seen as a bad thing.

I think I'll go ahead and accept the new limit and apply for a clarity card for my trips.

Thanks again!

Consumerist

I agree with zx81, above.

There a number of factors lenders use to assess your creditworthiness:

Total debt / total income; which should be low but not zero. i.e. How easily can you repay your debt?

Credit utilisation / credit availability; which, again, should be low. i.e. How reliant are you on credit to pay your bills?

By taking on additional credit cards, each with [[STRIKE]there[/STRIKE] . . . Oops] their own credit limit, you increase your credit availability so reducing the ratio (for the same debt).

Credit history; the more cards you have the better a lender can judge how you are able to manage your debt repayment. Wait at least 6 months between credit-card applications - too may applications within a short period can give the impression of desperation.

Kreacher

Consumerist wrote: »

I agree with zx81, above.

There a number of factors lenders use to assess your creditworthiness:

Total debt / total income; which should be low but not zero. i.e. How easily can you repay your debt?

Credit utilisation / credit availability; which, again, should be low. i.e. How reliant are you on credit to pay your bills?

By taking on additional credit cards, each with [[STRIKE]there[/STRIKE] . . . Oops] their own credit limit, you increase your credit availability so reducing the ratio (for the same debt).

Credit history; the more cards you have the better a lender can judge how you are able to manage your debt repayment. Wait at least 6 months between credit-card applications - too may applications within a short period can give the impression of desperation.

Thank you!

In regards to not applying for too many in a short space of time does that include overdrafts too? I just switched bank and opened another account to access the high interest rates and they both have overdrafts. Should I wait 6 months from now before applying for a credit card or will it be ok?

Nebulous2

Kerryfd wrote: »

Thank you!

In regards to not applying for too many in a short space of time does that include overdrafts too? I just switched bank and opened another account to access the high interest rates and they both have overdrafts. Should I wait 6 months from now before applying for a credit card or will it be ok?

credit applications and credit card limits to the extent you are describing are fairly small beer compared with more important stuff - not missing payments, being on electoral roll, not having an expensive lifestyle and showing you are able to afford the mortgage and save a deposit.

I'd take the increase. Barclaycard recently increased one of mine from £10k to £11.5

I don't know that it matters much either, but in switching bank accounts I generally refuse the overdraft. It's unlikely to be needed if you are using the account for savings / interest rate.

Don't apply for credit in the 6 months or so before a mortgage application.

Consumerist

Kerryfd wrote: »

Thank you!

In regards to not applying for too many in a short space of time does that include overdrafts too? I just switched bank and opened another account to access the high interest rates and they both have overdrafts. Should I wait 6 months from now before applying for a credit card or will it be ok?

If you are given or apply for an overdraft when you first open an account then the credit search will have already been done when you open the account. If, however, you later apply for an overdraft or an increase of overdraft then a new search is likely to be carried out. It is the searches on your credit file which can hurt your creditworthiness if there are too many in a short period.

chelseablue

I have recently had a mortgage approved and have 2 credit cards.


Barclaycard has a limit of £7,000 and when I applied for the mortgage the balance was £300.


Halifax credit limit is £6,200 balance £0

Consumerist

Kerryfd wrote: »

. . . I just switched bank and opened another account to access the high interest rates and they both have overdrafts. Should I wait 6 months from now before applying for a credit card or will it be ok?

One or two applications in a short space is probably going to be ok but when it gets to four or five within, say, six months then it's starting to look a bit problematical from the lender's viewpoint.

As said earlier, this stuff is more art than science and banks can change their credit criteria overnight and no-one is any the wiser.

You might want to consider registering for ClearScore's or Noddle's free monthly credit reports which list searches which have been made of your file.

Soft searches are used for things like ID verification which lenders and savings institutions don't see (but you can).

Hard searches, for credit, however, are seen by lenders and are the searches which might compromise your offers for credit.