Credit limit reduced on a barely used card

smipsy

Hiya guys.

As someone who plans to get a mortgage in the next 18-24 months, I keep on top of my credit reports in order to have a blemish-free history when the time comes.

I have an ASDA cashback card that I barely use anymore, since they cut down their cashback rate. Few days ago I got a letter from them saying that they are reducing my credit limit from £3000 to £500. I had the £3000 limit since I got the card.

Now, I'm not really fussed about the limit, because I don't really use the card anymore, few pounds here and there every month just to keep it alive. But I'm curious whether this will have a negative effect on my future mortgage offer?

I never miss any payments, my income hasn't changed negatively, so I guess they lowered my limit simply because I don't use it? If I can safely ignore this reduction because it has no effect at all, then happy days! If not, then I'm all ears.

Thanks in advance everyone!

[Deleted User]

It won’t effect your mortgage application no

Ben8282

It is actually quite unusual for mainstream lenders to reduce credit limits in this way. They are far more likely to close an account for dormancy. What did the letter actually say? Presumably they gave a reason for such a drastic credit limit reduction.
Unfortunately this could look bad to a potential mortgage lender as the credit limit has been reduced down to bad credit/credit builder levels. Are you sure there is nothing in your recent credit history to haver spooked them?

smipsy

Ben8282 wrote: »

It is actually quite unusual for mainstream lenders to reduce credit limits in this way. They are far more likely to close an account for dormancy. What did the letter actually say? Presumably they gave a reason for such a drastic credit limit reduction.
Unfortunately this could look bad to a potential mortgage lender as the credit limit has been reduced down to bad credit/credit builder levels. Are you sure there is nothing in your recent credit history to haver spooked them?

the letter states "As part of our commitment to responsible lending, we regularly review the credit limits of our customers to see if they are still suitable. Following the recent review of your account we would like to advise that we have reduced your credit limit to £500. This decision will not change and will only be reviewed if there is an error with your credit file."

There is nothing in my recent credit history. I have two other credit cards, AmEx with a £6000 limit and a MasterCard with a £2800 limit (which is used only when I can't use AmEx somewhere).

The only activity on my reports is an application for an HSBC Advance account which I did in summer in order to get £150
But I didn't take out any overdraft or credit cards with HSBC, even though they've offered them to me.

[Deleted User]

You can call them and ask them to reinstate the offer, and if declined, if you think the £500 limit really isn’t worth keeping close the account.

Carrot007

Ben8282 wrote: »

It is actually quite unusual for mainstream lenders to reduce credit limits in this way. They are far more likely to close an account for dormancy.

OP did say barely use not did not use so closing would not be an option.


Though yes reducing an actually being used card seem odd, unless it had a really high limit that they determined was never being used. £500 may be a bit excessive but....

A4445

Creation did this to me from 10k to 7k. The day they reduced it, I asked for a limit increase online and they put it back to 10k.

moneywow1

Carrot007 wrote: »

OP did say barely use not did not use so closing would not be an option.

OP made it sound like they spent a few pounds here and there just to keep it "active" not because they need it.