Should I increase my credit limit?

farkinator

Hi,

I have a fairly decent credit score but want to improve it in time for the new year when I will be needing a new mortgage deal. Tesco have offered me an extra grand on top of my credit limit on my credit card. I don't need the extra credit at the moment but should I take it to improve my score?

Cheers,
Mark

StopIt

The mortgage deal will not be impacted by your credit score but your history.


Having access to, but not using credit limits can be seen as a positive, but isn't a huge factor either way. I'd accept it, but don't worry about your credit score changing either way as a result.

farkinator

Thanks - what "history" do you mean here?

Ebe_Scrooge

farkinator wrote: »

Thanks - what "history" do you mean here?

It's simply a history of how you have managed credit in the past - which is recorded by the CRAs, and viewed by potential lenders.


"Good" things to see are using credit wisely, not overstretching yourself in relation to your income, always repaying debts on time, never making a late payment, never defaulting on debts.


"Bad" things are late payments, defaults, things like that. Also, constantly living on an overdraft is bad. Lots of applications for credit in a short space of time is bad - makes it look like you're desperate. Also, having no history at all is bad, in terms of applying for new credit.


As is stated time and again on this forum, a potential lender cannot see your fictitious "score" - they will look at your history and make a decision based on that. Ultimately, they're looking to lend to someone who has a reasonable chance of repaying what they owe, without them having to spend money on chasing you. And of course, they're hoping you'll pay them a nice lot of interest on top as well


And the easiest way to build a good history is simply to use a credit card for everyday purchases like petrol, food, etc., and repay it in full every month on time. You pay no interest, lenders can see you're a responsible borrower. Simple as that.

PixelPound

You don't say what your current limit is or your average balance. If your limit is £2k and you are using around 50% then it would look better, if your limit is a few K more and you hardly use any of it, it will have little impact. The fact that your limit increases can be seen as a good thing as it shows trust on you been responsible with it.
I don't know what effect it will have on your score, as CRA's abhor change and so in the short term it may not have the desired effect scorewise, but as has been said its not the score but your history that counts.