How much available credit should I have?

Legacy_user

No longer needed

[Deleted User]

You might want to lose one or two at most.

It would be more of an issue for further cards than mortgages though.

Blackbeard_of_Perranporth

ermis wrote: »

The questions is do I have too much credit available compared to my salary?

Yes. Now do you want to use this facility you have or reduce your credit to zero?

[Deleted User]

As you only have 10k in balances it doesn't look bad BUT if you are looking for a mortgage next year, it would be an idea to close a couple of the zero balance cards and make some effort to over pay the Lloyds (1) and halifax (1)

Anthorn

ermis wrote: »

Hi everyone,

I wanted to ask about the available credit that I currently have across 8 credit cards.

I have the following cards:
Lloyds (1): £6,000 limit - Balance £5,800 (0% - 32 months left)
Lloyds (2): £9,800 limit - Balance £0 (6.4% Regular interest)
Halifax (1): £5,500 limit - Balance £4,100 (0% - 27 months left)
Halifax (2): £9,800 limit - Balance £0 (Clarity for spending abroad)
HSBC: £10,000 limit - Balance £0 (0% - 11 months left)
Amex Gold: £10,000 limit - Balance £350 (Regular spending-paid off in full every month for points)
Barclaycard: £7,600 limit - Balance £0 (Keep for regular 0% offers)
Santander Zero: £2,600 limit - Balance £0 (Spending abroad-back up)
Total Credit Card limits: £61,500
Salary: £30,000

The questions is do I have too much credit available compared to my salary? Is this normal? I don't need of course that much credit and I only use my Amex for everyday spending. Every card keeps on giving me limit increases even if I don't use them. Will that look bad to a lender if I apply for a mortgage and I have twice my salary amount in credit card limits? I have always paid them on time via direct debit.

Thanks

Your available credit should not be more than your annual salary. But credit utilisation plays a part - that's the proportion of available credit you are using or conversely what we may call debt.

The reasoning is that when debt is equal to or greater than salary it could be a warning sign to lenders that you will have difficulties keeping to your financial commitments. MSE Credit Club points to that in the affordability score.

Certain equations of acceptable available credit / debt / income are expounded from time to time but sooner or later they are disproved. The reason is that there is more than one borrower and more than one lender.

So a definitive answer cannot be given because it all depends on who is borrowing, their income and assets and who they are borrowing from.

A4445

I don’t think how much you have available is an issue. My salary is around 23k and I have 87k available. Both Halifax and Natwest agreed DIP. I don’t owe anything except my monthly spend.

I do not need so much tbh I’m gonna get rid of a few.

Anthorn

A4445 wrote: »

I don’t think how much you have available is an issue. My salary is around 23k and I have 87k available. Both Halifax and Natwest agreed DIP. I don’t owe anything except my monthly spend.

I do not need so much tbh I’m gonna get rid of a few.

There is more than one lender:

One lender might think that if it's there you're going to use it and therefore apply a decision which is akin to 100% utilisation. That's where reducing credit limits comes in.

But another lender might completely disregard available credit and apply credit utilisation.

The common factor in most of them is income but not always: I know people who have credit utilisation which is several times their income.

A4445

I’ve decided to close a few anyway it can’t harm to get rid of some I don’t need 87k. Barcycard and Lloyds card closed!