CC Lower limit or close

I have 5 Credit cards. All of them have a balance of zero so none of them have any outstanding balances.

I have had these cards for many years but in total the credit available is in the excess of about £30k. MBNA being the largest availability of £16k.

I am planning on applying for a mortgage in Feb 2019. I already have a AIP in place but would like to tighten my credit report up a little more to increase my approval chances further.

Is it best to reduce the credit available on the CC's or close the cards? Or is there a formula or rule of thumb for accessible credit on CC's based on annual income?


  • Ben8282
    Ben8282 Posts: 4,821
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    Leave everything as it is.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,281
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    I disagree with the comment above. Lenders look at availability of credit and percentage used. Obviously you are not using them but lenders may take the view that you would be able to run up £30k of unsecured debt.

    My view would be to close at least 2 or 3 ofthe cards keeping the oldest ones. Presumably you don't intend using them for large purchases in the near future?

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  • Paul_DNAP
    Paul_DNAP Posts: 751
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    It really depends on how the people doing your credit scoring will assess the situation. Some will see that you have paid them all in full, and see you as a responsible borrower. Others may see your total available credit and say, if they go on a spending spree, how will they afford to pay their mortgage.
    Overall, I'd come down on the side of maybe 5 is two cards too many, or at least do you need such a high limit on each one?
    (Although I could be wrong, I often am.)
  • sparkey1
    sparkey1 Posts: 444
    First Post
    Keep them. It makes your average credit utilisation lower. Here is an example. Person A has one credit card with a limit of £1000 on. He owes £900 quid. He is seen as high risk because he has a 90% debt ratio. Person B also has one card, and owes 1800. Ie Double that of Person A. However person B has a 10K limit, so he is only utilising 18% of his credit. He is seen as lower risk, and potentially is scored higher. In your case if you hypothetically had 2K of debt, you would be using just below 7% of your available credit. If you closed your 16K MBNA card, the debt utilisation would work out at 14%.

    Another thing to note, the longer the average card age, the more stable you are considered to be, and therefore that helps with the scoring.

    The only time I personally would close a close, would be if they introduced a new annual fee, or if I wanted another type of card from the same lender, and they had a policy on allowing only one card. For example, it may have changed, but Halifax used to let you have only one credit card at any one time.

    MBNA do come out with some good offers from time to time, and they also allow you to transfer money to a current account so again worth having in reserve.
  • nic_c
    nic_c Posts: 2,928
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    Don't lower limits - it won't show why they have been lowered, so it could be seen that the card provider has lowered to reduce exposure.

    The rule of thumb for available credit is your salary, in your case if it's 16K or 20K then it could be seen as too much credit, but if your salary is £35k or £40K then not really a problem.

    Your available credit is probably a very minor factor, as they are zero balances. Personally I can't see it been a problem, because they have zero balance - mortgage companies look at affordability (which is why sometimes they stipulate that existing debt be paid off from savings). So whether you close any or keep all open won't impact your mortgage.

    You may want to look at these in general terms. For instance are any of the card providers known for good new customer incentives, one possibility is to close that so that after you have bought you may be eligible for a new customer incentive in case any big purchases. Or like MBNA, any offering regular incentives, just in case you have big purchases after buying that you want to put on a preferential rate.

    If a card isn't giving you incentives and you are unlikely to ever use it, then there is the argument for closing it. Remember they say keep the oldest card open and the one with the highest limit, after that its up to you.
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