Credit card utilization.

Marty_id

Hello guys.

Looking for a bit of guidance.

In relation to credit cards and keeping good credit...
is it better to have two and keep to using a lower percentage or just one?

And a question that could get me some stick...
Whilst I understand a lot of people believe/know that credit "SCORE" isn't important. Would the reduction is score by applying for a credit card be lesser to greater than the increase in score from getting the card/credit? Does this stay true false to getting two cards.

Hope you're all well
Cheers for reading.

Regards

[Deleted User]

Ignoring the score - having a card and using it well will look better to lenders than not have any credit at all.

There is a limit to how much credit lenders will feel comfortable with you having.

theburningcat

My utilisation was at >90% (£1800 overdraft and £2400 credit card) plus an average balance of about £3000 on a charge card for 2-3 years. It is, of course, not a good thing, but it did not cause me any problems so I would guess that utilisation is, on its own, not a priority for all lenders.

jamesd

There would be a dip for a short time after getting the second card then after a few months improvement due to two active accounts having nice regular payments being made. Two or maybe three of a particular form of credit is beneficial, less gain after that. Lower utilisation is good, probably more helpful than the higher total amount of credit, though this depends on how the amount of credit compares to income when you actually make an application for credit.

While it's for the FICO score in the US so isn't necessarily directly comparable to the UK, the guidance for that says around 30% or lower utilisation is optimal.

For those who are stoozing, credit is there to be used so it's wasteful not to have quite high utilisation levels. Mine's around 76% at the moment over eight cards. But if you're not stoozing this is not really important.

redux

One possible advantage of two cards is that if you may occasionally find yourself unable to pay off the full amount in a month, then having spending spread over two cards still gives you the chance to pay minimum on one and full on the other, saving about half the interest.

On the other hand if you are about to apply now, then there are some cards with zero interest offers to start with, so the consideration in my first paragraph may not come into play for a while.

Anthorn

theburningcat wrote: »

My utilisation was at >90% (£1800 overdraft and £2400 credit card) plus an average balance of about £3000 on a charge card for 2-3 years. It is, of course, not a good thing, but it did not cause me any problems so I would guess that utilisation is, on its own, not a priority for all lenders.

ditto

High utilisation may affect a score for example from Clearscore who are rather hot on utilisation but I have absolutely no evidence whatsoever that it affects credit applications. My utilisation is very low at present but that hasn't always been the case and credit applications have not been affected.

Incidentally, Clearscore also views a high credit limit as better than a low credit limit but in the case of a new credit application the opposite is true.

jamesd

Highest limit is something that I know is used sometimes as a positive measure. It's a while ago but I was once asked in a card application if I had any cards with a limit over £10k.