Credit limits

chartom123

Hi,


I am currently saving for a deposit as I want to buy a house in the future and want to get my credit report looking as good as it can be. Over the past few months I have been saving hard and have managed to pay off my 2k credit card and 2k overdraft (yay!!) :beer:


I was just wondering if I should get rid of them now they are paid off and close the accounts? I haven't used my CC for ages, I'm not interested in or tempted to use it again so was just gonna close it, but I was wondering if I need to leave it running to prove that I can not spend anything even though I have a 2k limit available? Or should I lower the limit and not use it?


And should I completely get rid of my overdraft limit too? Or lower it and not use it?


Thanks for any help anyone can give! I have no idea what is best to look good on my report :-)

bruich76

Having a credit card in terms of your credit record is usually a good thing I think especially if you are making regular payments and not racking up debts.


Certainly, won't do any harm. I usually just get everything through the month on a credit card that gets 1 percent back and then pay it off at the end of the month.


Doing the same would I suspect have a good impact on your credit record.

theartfullodger

Use CC but pay off in full each month - I have direct debit for full amount set up (gets you extra consumer protection
https://www.moneyadviceservice.org.uk/en/articles/how-youre-protected-when-you-pay-by-card
"Section 75" protection ...
.. and as you are delaying actually paying for things you have more money in bank.

Get stuff of credit, especially interest free, or mobile 'phone contracts, and pay in full each month. Better score.

Gilead

Demonstrating that you can service a debt can build up or enhance your credit score. As the above contributors say use your credit card wisely - for example put your weekly shopping/petrol/everyday expenses on your credit card and pay in full by direct debit at the end of each month will serve you well.

Having no credit history can weaken your hand when it comes to mortgages/loans even though you would have a higher disposable income.

haf1

I would definitely not lower the credit card limit - having a high credit limit with a low percentage of use is good for your credit score. As above - use it and pay off in the same month.

The big no-nos for a mortgage application would be things like payday loans, CCJs, betting, and possibly new applications for credit, changing banks, moving jobs shortly before applying for a mortgage. So just keep saving, and fingers crossed you'll get there soon!

csgohan4

haf1 wrote: »

I would definitely not lower the credit card limit - having a high credit limit with a low percentage of use is good for your credit score. As above - use it and pay off in the same month.

The big no-nos for a mortgage application would be things like payday loans, CCJs, betting, and possibly new applications for credit, changing banks, moving jobs shortly before applying for a mortgage. So just keep saving, and fingers crossed you'll get there soon!

the CRA don't lend you anything, so scores are useless, lenders have their own criteria and do not base on scores by third party reference agencies

haf1

Agreed. The point is this.

Having no credit history can weaken your hand when it comes to mortgages/loans even though you would have a higher disposable income.

Apart from that, not paying your bills or applying for payday loans do count for a mortgage provider - while of course advice like "your overall credit limit is low, let us sell you another credit card or two" can happily be ignored.

ReadingTim

I don't think that a total of £4k of unused credit will cause you any problems, as long as it stays unused! The problem with reducing it by much, or removing it totally, is that should you have a genuinely unexpected and large bill for something, you might be stuck if you don't have some sort of emergency float should the worst happen...

But on a day to day basis, the overdraft must never be dipped into, and the credit card paid off in full, every month.