How much available credit?

tyktok

Hi guys & gals :santa2:

Been a bit of a lurker for a while and have only signed up today, how very lazy.

Just want to ask a question that I can't seem to find an answer to.

What is the best amount of available credit to have?

I have in the past had loads of debt, still have some but slowly getting there. Had my LBM after reading 'Richest Man in Babylon' in April of this year, excellent book, can't reccommend it highly enough.

I'm after getting rid of my debt because I need to get a mortgage and my debt was too much to even start thinking about it. Now I have paid some off, should I start to cancel things or leave them open in order to improve my credit rating?

I have available:

£1250 LloydsTSB Overdraft - cleared
£1250 Alliance & Leicester Overdraft - cleared
£1350 Barclaycard Credit Card - cleared
£1550 Lloyds TSB Credit Card - cleared
£6000 MBNA Credit Card - small balance on this one

Now I have recently received a letter saying they are reducing my Barclaycard credit limit and this is because of a credit check they do every 3 months. This is now going down to £260

Is this because of all the available credit I have as my credit rating has probably never been better?

Thanks for any help

angelavdavis

There is no easy answer to be honest.

Basically, each company will have its own rules on how it awards credit cards or sets credit limits.

I personally tend to cancel all credit once I decide I no longer need it, to keep my potential credit down to a minimum so I can apply for a better rate card or more competitive mortgage, etc if I need to. My credit rating (for what its worth) is excellent - however I was recently turned down by Capital One - I am obviously not high risk enough for them as I pay on time and won't earn them money!

Have you actually cancelled the accounts/ods you have paid off? If not, it is likely that it is the available credit you have available to you that has caused Barclays to reduce the limit. If you actually contact your credit companies and either cancel and cut up the cards or reduce the limits, this will help for future.

Martin did an article about credit ratings here.

immoral_angeluk

If you have lots of available credit on different cards it would definately be a good idea to close some as you could show as being a greater risk than if you had a smaller available balance.