Rights of Credit Card Holders

T-G-C

Hello,

I’ve had a few applications for credit filed on my record recently, not tons but enough to consider it a spike. I have stopped now as I’ve realised my credit utilisation currently is one factor hindering me from being approved.

If my credit card companies sees them, are they allowed to reduce my credit card limit becuse of the searches recently and demand the difference owed within 30 days?

Someone told me they check your file every month and will either cut my card account with them off or reduce my credit limit and demand a settlement of the higher difference.

Are they allowed to do this, or won’t they care about the searches as long as I maintain my healthy record of no defaults or late payments etc.? I’m not expecting a limit increase, I just want to know I am safe from being thrown out by my card providers.

Thanks!

[Deleted User]

Providers can cut limits as they see fit. Searches are generally unlikely to be a direct cause.

However, they cannot demand repayment except in cases of default, but in practice, very rarely even then.

T-G-C

Deleted_User wrote: »

Providers can cut limits as they see fit. Searches are generally unlikely to be a direct cause.

However, they cannot demand repayment except in cases of default, but in practice, very rarely even then.

They would have no other reason other than high utilisation of credit overall and the recent searches.

If my current credit limit was £250 and I spent £250, and they reduced the limit to £150, what would happen to the other £100? Would it be considered an overlimit if the balance isn’t reduced to reflect the new limit or would they allow you to maintain the balance without penalty as long as you’re not continuing to spend over?

[Deleted User]

They wouldn't reduce it if you were at the max.

T-G-C

Deleted_User wrote: »

They wouldn't reduce it if you were at the max.

Someone who pays their bills on-time each month but uses their credit limit to the max, is considered a good customer I would hope.

This is Vanquis, Aqua and Capital One we’re taking about, so I can’t see sub-prime lenders cutting their already tiny amount of credit lines compared to prime cards.

[Deleted User]

T-G-C wrote: »

Someone who pays their bills on-time each month but uses their credit limit to the max, is considered a good customer I would hope.

They'd be considered a higher risk customer, albeit profitable if paying interest.

T-G-C

Deleted_User wrote: »

They'd be considered a higher risk customer, albeit profitable if paying interest.

Sadly the profitable part doesn’t apply to me, I won’t give them a penny more than I borrowed. As long as I know I’m not a high-risk for defaulting, they can label me however they like, they’ll never catch me out missing a payment :rotfl:

I’ve been as close as £0.30 to my credit limit, but I would never use it to go overlimit, as I review each transaction before making it.

takman

T-G-C wrote: »

Sadly the profitable part doesn’t apply to me, I won’t give them a penny more than I borrowed. As long as I know I’m not a high-risk for defaulting, they can label me however they like, they’ll never catch me out missing a payment :rotfl:

I’ve been as close as £0.30 to my credit limit, but I would never use it to go overlimit, as I review each transaction before making it.

That's not a very good strategy for managing your credit. If you spend up to the limit each month then it doesn't look good to the lenders and you will be less likely to get any cards with decent offers/benefits in the future.

If your currently spending alot of money on sub prime cards each month and paying it off in full you really want to be aiming to build up your credit history to get a cashback card.

SnowTiger

takman wrote: »

That's not a very good strategy for managing your credit. If you spend up to the limit each month then it doesn't look good to the lenders and you will be less likely to get any cards with decent offers/benefits in the future.

That's not how I see it. If someone is running close to their limit every month and paying off the balance in full, it would indicate (to me) their credit limit is too low and should be upped. Especially if the limit is low.

chattychappy

The problem with going within 30p of your limit is that it's very easy to make a mistake and go over limit... which is not a good thing.

In some cases, a retailer could make a mistake - and whilst in theory anything negative can be reversible, it can be a right ole headache.