Increasing credit limit

stuckinazoo

On Clearscore, the one negative point on my report is that my total credit limit of £1900 is rather low. It suggests I increase it. Most months I barely use a quarter of that credit but I am hoping to buy my first property soon so will increase my limit if that will help me.

Firstly, what amount of total credit is seen as healthy? And secondly, as I was accepted for £1200 of that credit about a year ago, is now a good time to ask for an increase by that provider? I've not applied for any credit since then.

eco_warrior

A year seems reasonable time to me, most card providers will likely have a timeframe where they wont look at an increase, like the first 6 months.


I'm sure others might comment after me but personally I wouldn't ask for an increase if you don't need one. I also wouldn't read too much into what Clearscore are saying. But that's just my opinion.

dj1471

If you're about to take out a mortgage then asking for a limit increase is a really daft idea, especially if you don't need it.

The card issuer may well conduct a credit check which isn't desirable in itself, also the more available credit you have the less a mortgage lender is likely to lend you.

A4445

dj1471 wrote: »

If you're about to take out a mortgage then asking for a limit increase is a really daft idea, especially if you don't need it.

The card issuer may well conduct a credit check which isn't desirable in itself, also the more available credit you have the less a mortgage lender is likely to lend you.

Sorry that’s rubbish. I’ve got £110k of available credit, it made no difference to my recent mortgage app. Not a single question from the underwriter I did make sure everything was zero before applying. Affordablity is affected by debt not availability of credit.

benbay001

A4445 wrote: »

Sorry that’s rubbish. I’ve got £110k of available credit, it made no difference to my recent mortgage app. Not a single question from the underwriter I did make sure everything was zero before applying. Affordablity is affected by debt not availability of credit.

If they did a credit check on you then they would know your available credit. They wouldn't have to ask you.

A4445

benbay001 wrote: »

If they did a credit check on you then they would know your available credit. They wouldn't have to ask you.

Yes you right but it wasn’t an issue. I was expecting them to say something or ask me to close accounts. It went from application to offer in less than a week.

[Deleted User]

Ignore the “advise” on ClearScore.

They’re all aimed at you improving your credit score, which as we all know is not necessary.

If you want a credit limit increase then ask for one.

dj1471

A4445 wrote: »

I’ve got £110k of available credit, it made no difference to my recent mortgage app.

That's nice for you, but you don't know the OP's financial situation. If they're borderline for the size of mortgage they need then that extra available credit can make a difference. Besides which they don't need to extra credit.

You may also notice that I said may and likely, that's because every lender treats these things differently.

A4445 wrote: »

Affordablity is affected by debt not availability of credit.

Now that is most definitely rubbish. A lender will always consider the worst case scenario, that being that you decide tomorrow to utilise that £110k of credit. Could you still afford to pay your mortgage while servicing £110k of debt? Again whether that's an issue depends on the lender and your overall financial situation.

A4445

dj1471 wrote: »

That's nice for you, but you don't know the OP's financial situation. If they're borderline for the size of mortgage they need then that extra available credit can make a difference. Besides which they don't need to extra credit.

You may also notice that I said may and likely, that's because every lender treats these things differently.

Now that is most definitely rubbish. A lender will always consider the worst case scenario, that being that you decide tomorrow to utilise that £110k of credit. Could you still afford to pay your mortgage while servicing £110k of debt? Again whether that's an issue depends on the lender and your overall financial situation.

Fair point I’m can only speak for my experience. There would be absolutely no way I could afford paying back £110k it is ridiculous amount of credit. I’m just lazy and can’t be bothered to call to cancel. Fortunately Tesco have sent me a letter saying if I don’t use the card it will be closed. I will let that happen.

I do generally feel that we all over think the issue of credit and mortgages. The MA that did my application said they only worry about affordablity not available credit. As soon as you take a mortgage you can apply at that point and get in a mess.

Ben8282

My total available credit has exceeded my annual income for at least 25 years now and has never caused any problems.
Total available credit of £1900 is very low.

Terry_Towelling

stuckinazoo wrote: »

On Clearscore, the one negative point on my report is that my total credit limit of £1900 is rather low. It suggests I increase it. Most months I barely use a quarter of that credit but I am hoping to buy my first property soon so will increase my limit if that will help me.

Firstly, what amount of total credit is seen as healthy? And secondly, as I was accepted for £1200 of that credit about a year ago, is now a good time to ask for an increase by that provider? I've not applied for any credit since then.

My opinion for what it's worth.

There is the possibility that asking you to increase your credit limit means 'please apply for more cards through us' rather than ask for an increase on your current cards. It's that marketing angle again which is the main reason these credit score providers exist.

As for the mortgage, don't forget that will be secured on the property you buy, so the risk to the lender if you default is less as they could seek to repossess the property.

Mortgage providers really want to give you a mortgage because they make money from it. They need to be confident that you can service your existing/potential debts and the new mortgage going forward (affordability and stability) and that you have proven yourself to be good with debt in the past (your credit history).

A thin credit history means you might be something of an unknown quantity and a poor credit history means you are probably a higher risk - that's all.

Large amounts of existing debt and access to lots of additional credit may increase the theoretical risk of future default but only if your lender calculates that your means are insufficient to meet the potential demand and your history reveals problems with current/prior debts.

Does Clearscore not offer any advice for your specific situation? If not, what is the point in it?