Reduce credit limit on old cards to maximise limit on new cards 14 April 2016 at 10:42AM in Stoozing: free cash from credit cards 5 replies 3.3K views

nb0825

Just curious about the credit limit that would be available if I apply for a new 0% purchases CC. Say my limit on a barclaycard is £2000 but the 0% promotion ends soon, if I want to have a £2000 limit on a new CC, say from MBNA, shouldn't I be reducing my limit on the barclaycard? Ideally I want to keep the barclaycard to maintain a long relationship, which will be beneficial for mortgages/loans etc.

Superscrooge

When you have access to lots of credit this approach might work. But if you only have one credit card with a £2,000 limit, reducing that limit is unlikely to give you a higher limit if you apply for another credit card.

Reducing the limit might even work against you. If you reduced your current credit card limit to say £500. Your new card provider might take the attitude that if your current card only trusts you with a £500 limit then we better not be too generous with our credit limit.

UKmitch

I've been thinking about this myself lately. The interest free period ran out on a £6000 limit 12month 0% Nationwide CC and I'd continued spending on it, paying 18.9% on a £4000 balance racked up before buying a house. Only recently did I get my act together and balance transfer it over to a £6000 limit Halifax 40month 0%.

I closed the Nationwide CC account, and now wish I hadn't as I recalled the benefits of 'available credit' on my Experian score. I believe the guidance Experian give is 1/3rd of your available credit should be left

I've since applied for the Post Office Money 0% 16months (going 27months) and was given a limit of £5400 - slightly less than Halifax limit and had with NW - perhaps my score isn't as good with them.

My feeling is to keep as much available credit as possible, whilst a quick £15 to Experian will tell you if having a second, third, fourth card actually damages your score.

[Deleted User]

Any change in your Experian score won't tell you whether lenders are seeing you more or less positively.

UKmitch

Deleted_User wrote: »

Any change in your Experian score won't tell you whether lenders are seeing you more or less positively.

Surely it will if they're using Experian as the rating agency?

Experian is supposed to use similar criteria to others, so unless all lenders are wildly different in the things they care about, it's fair to rely on Experian as a good estimator.

Voyager2002

UKmitch wrote: »

Surely it will if they're using Experian as the rating agency?

Experian is supposed to use similar criteria to others, so unless all lenders are wildly different in the things they care about, it's fair to rely on Experian as a good estimator.

No.

Every lender uses its own criteria. While the things that are highlighted as problems on a free Experian report really do matter (missed payments; not being on the electoral roll; frequent changes of address and job) anything beyond that will depend on a particular lender's business model.