Reduced my credit limits - Big mistake

meridian4

Hi,
I would like some advice please. Over the last 4 years I've been steadily reducing my credit card debt with 0% cards, switching when the offer ends etc. About 9 months ago, I was reading an article online, and misread the advice. I thought it said that having high available credit limits was a detriment to your credit score. So I contacted each of the three cards I had at the time and reduced the available credit on each from £6k to £3k. A big drop.
That was a mistake, because when I next needed to apply for a 0% interest card move, my credit score was poorer. I thought it would only get better??? (I have never missed a payment, and no other debt or faults that could have caused credit score drop - so it must have been the reduced credit line.)

My question:
I need to apply for a new card to take on the final consolidation of my card debts. Hopefully onto one card that I can clear. Total Approx £3k
I don't know whether I should close some of the dormant/cleared cards I have, or is that yet another wrong move? Or, should I contact these cleared cards and ask for the higher credit limit back??? Scared to make wrong move while I need one last shot at a 0% interest / 0% transfer fee card that will give me access to a £3k transfer allowance. The most recent card I got was in September 2016 (the AA) and they only gave me £2.4k limit.

I currently have the following cards:
Tesco. Nothing owed on it. £3.5k credit limit
Halifax. Nothing owed on it. £3k credit limit
Yorkshire Bank: £1k owed on it. £4.5k credit limit
AA Card: £1987 owed on it: £2.4k Credit limit.

Would really appreciate advice so I don't make another stupid mistake.
Thanks

molerat

Although you reduced your available credit in doing so you increased your utilised % ratio. Are you currently using a card for spending ? Not "using" a card can be a negative factor. With limits of £13.4K what is your annual income ? That may not be a major factor though as Tesco and Halifax have just given me BT cards which took my total available credit to just over twice my declared income with my outstanding (stoozed) balances at over half of my income.

meridian4

Hi, thanks for reply.
Ah, I see your point on utilised credit.
And no, I don't usually 'use' a credit card regularly, although I have started over last month, and clearing the balance at month end - so that's a good thing?

My income is £27k p/a
No other debts or loans.

As I said, previous credit limits amounted to at least 18K

meridian4

Here's the section 22 from Martin's Boost Your Dredit Score Guide that confuses me. So should I close my cleared cards, or is that going to make matters worse?
Cancel unused credit and store cards

They can kill your application. Access to too much available credit, even if it isn't used, can be a problem. If you have a range of unused credit cards and lots of available credit, it could be a good idea to cancel some of them. This lowers your available credit and should help.
However, just to complicate things, long-standing bank accounts with good credit histories can be a benefit to your credit score, so they're often best left open. There's no definitive answer as to whether you should close down your old cards, because all lenders are different. But, look to strike a happy medium – if you've lots and lots of unused credit, close some cards down, but don't close 'em all. And above all, don't max out. Cancel Old Cards has full info on what to close and when.
If you need to cut credit card debt costs, first check if the old cards will let you shift debt from other cards to them cheaply, as you then won't need to apply for new credit. This helps your credit file, and means you're using your existing credit more efficiently.

meridian4

I've just joined MSE Credit Club. I think it's a great idea.
I can now see my credit score details. Score is 935
(I jused ClearScore for a rating last year, and they showed the drop I referred to in my above posts. Not sure what it may have been in Experian back then).

There are about 6 BT cards suggested, with 100% Accepted on them, but they also have a transfer fee.
I'm looking for a 0% fee preferably. 12 months upwards is OK timeframe. The only offer for that is classed as 95% Acceptance.
Virgin Money - 24 months 0%, no fee

I used to have a Virgin card about 3 years ago. No problems with them.

Or am I best going with this 100% Acceptance offer for safety?
MBNA - up to 32mths 0%, 0.64% fee

molerat

The problem is that Martin's guide is in complete contrast to my situation. I had a card with a large limit and low utilisation, a card with 95% utilisation and another with 75% utilisation and minimum payments and I am seemingly well outside my affordability. I applied for 2 BT cards and got well over the amounts I applied for. Its a funny old game with no correct answer I am afraid.

MSE showed me as 90 - 95%. My best limit was from Tesco so, as you are allowed more than one card from them, would it be worth a punt applying for a 24mth 0% 0 fee BT card from them.

MrsTinks

First - stop panicking!

Second - you have enough available credit to shuffle your debts around - what 0% offers do you currently have on the cards? ie contact them and ask what 0% offer they might offer you? You don't have to put them all on one card - and you certainly don't need to apply for a new one at the moment

Sharon87

MrsTinks wrote: »

First - stop panicking!

Second - you have enough available credit to shuffle your debts around - what 0% offers do you currently have on the cards? ie contact them and ask what 0% offer they might offer you? You don't have to put them all on one card - and you certainly don't need to apply for a new one at the moment

What she said. I find Halifax always offer me 0% deals. Existing balance transfer deals aren't as good as new cards, but if you can't get any new cards then they're fine. Tesco occasionally offer me 0% deals.

If there are no 0% deals on your account, perhaps call them and see if they'll offer any 0% balance transfer deals for you?

bearcat16

In my opinion (and experience) the advice that 'too much available credit' is a problem is simply incorrect.

I have approximately £40k of available credit on credit cards that I'm not using, and this increases approx every 6 months as the card issuers automatically increase my limits.

In fact, when my available credit increases with one card, the others always follow suit a month or so later, often with a balance transfer offer.

So, yes, in my experience that is plain wrong.

sourcrates

bearcat16 wrote: »

I have approximately £40k of available credit on credit cards that I'm not using, and this increases approx every 6 months as the card issuers automatically increase my limits.
.

That's both unbelievable, and frightening, in equal measure !!

MrsTinks

sourcrates wrote: »

That's both unbelievable, and frightening, in equal measure !!

*cough* uhmmmm all 3 of mine just upped mine so I now have over £30k of available card credit although I'm using about I think £10k worth of it - I get at least 1 0% offer a month. And all 3 just upped the limits un-requested... I just couldn't be bothered to tell them not to as I intend on closing at least 1 in the next couple of months

Scary yes... small part of me wants to see how much they eventually up it to without me intervening...