What to do with so much available credit?

Nasqueron

Nebulous2 wrote: »

To some extent you are right - but some posters work in the industry (not me) and have more knowledge of how things work than others. All opinions are not worth the same.

Personally I think there is a lot of rubbish talked about potential limits.

I have had limits in excess of my income for over 20 years, at times in excess of twice my income, and have never had a problem getting financial products. Lenders act in concert. If one gives you a high limit others trust you because the first one does and so on. They also don't like changes, closing several accounts just as you apply for a loan may concern them about what might be happening.

There are much more important things than limits; indebtedness, affordability, stability of employment, stability of address, electoral roll, good history of making payments etc. Credit limits come far down the pecking order.

You've built up credit limits over time


Do you have, as the OP, credit limit of 125% of base salary and tried to borrow another 25k giving you potential debt exposure of 180-190% of your base salary?


Your 20 years is irrelevant as the rules introduced by the FCA in 2014 are not retrospective but going forward. The dialogue coming out of the FCA is all about responsible lending and not letting customers become over burdened - the part of their handbook that covers this (chapter 5 - responsible lending) is 28 pages of rules! It's logically irresponsible to allow someone to have debt exposure far in excess of their ability to repay - imagine if OP lost his job for example, with 25k debt, so much available credit on cards would be very tempting to run up and not be able to pay back.

letspretendforaminute

Through sheer laziness by not cancelling credit cards during my stoozing days, I have amassed £100k of available credit and my ability to get the headline rate for personal loans has remained unaffected. I wouldn't worry too much.

Nebulous2

Nasqueron wrote: »

You've built up credit limits over time


Do you have, as the OP, credit limit of 125% of base salary and tried to borrow another 25k giving you potential debt exposure of 180-190% of your base salary?


Your 20 years is irrelevant as the rules introduced by the FCA in 2014 are not retrospective but going forward. The dialogue coming out of the FCA is all about responsible lending and not letting customers become over burdened - the part of their handbook that covers this (chapter 5 - responsible lending) is 28 pages of rules! It's logically irresponsible to allow someone to have debt exposure far in excess of their ability to repay - imagine if OP lost his job for example, with 25k debt, so much available credit on cards would be very tempting to run up and not be able to pay back.

I don't think we are ever going to agree on this - though I agree with a lot of other things you post. At least you aren't advising that they reduce limits this time, which could damage their chance of getting what they wanted.

I don't think there is any basis to what you say about limits - as opposed to balances, other than you think lenders should be that responsible.

Here's a mortgage underwriter telling you limits aren't that important.

Credit providers threw credit at me up until the credit crunch 2007ish when offers largely dried up. Just over two years ago I noticed the lending market was opening up and I was getting a lot of offers by mail/email.

In September 2016 I went to buy a car, intending paying it cash but was offered incentives to take a loan and keep it for at least 3 months. So I took a loan.

In November / December 2016 I decided to try to see what I could get for money transfers, applied for two new cards and utilised an existing balance to transfer almost £35k to my bank account. I now had over £40k in debt. At the time I didn't expect to ever need credit again.

Just over a year later car loan repaid, but still with over £30k of credit card debt I decided to buy a second house, as a holiday home/retirement home. I spoke to the mortgage lender who told me what was possible, and said I needed to reduce my debt to under £10k, which I did. June 2018 I bought a second house, then after the mortgage had gone through I closed 2 of my 8 credit cards.

I still had limits of over £60k, have two houses to fuel, two sets of council tax to pay and a mortgage to pay for the first time in 5-6 years. Since I bought it I've had two unsolicited limit increases from credit card companies- possibly because I paid off a chunk of credit card debt to get the mortgage.

So my personal experience has been that limits have not mattered.

DD265

I'd be tempted to convince Virgin or MBNA to give me a 0% on purchases deal (usually not hard if you threaten to close the account) and buy a cheaper car within that limit.

Perhaps a more helpful response though would be to look here: https://www.moneysavingexpert.com/eligibility/loans-calculator/ and see how things stand at the moment. You may find that you don't need to make any changes.