Becoming obsessed....

Aspiration

EssexOstrich said:

Today I’m celebrating a realllllly small thing! I took the money off someone for something I’d got for them when I went shopping. I’m rubbish at this, I feel weirdly uncomfortable taking money off people, especially those who I know don’t have much so I always, always say don’t worry about it and it’s probably cost me a fortune over the years. It’s only £22 but I did it. 

Absolutely can relate to this, Well Done for another step forward!! 

savingholmes

£22 is a lot. I sometimes let go of £1 or £2 but if it is more than that I would definitely take it back. Glad that you are growing. I still over-rescue people too - which would be fine if I wasn't in debt....

EssexOstrich

Sorry for the quietness, there's not been a lot to say really given the fact we're all still more or less stuck indoors!
So it's been almost a month since I decided to try and sort myself out a bit. I started on £30084.91 and am now down to £28027.65 so I've managed to pay off 6.84%. As I've said before this isn't a normal month as we had some savings on commuting costs, everyday expenses and had frozen some bills but for me, it's a good start! I've transferred some bits around so it's on better interest rates. Nothing is above 6% now and I'll work on those at some point too. My goal for the next month is to get it down to below £27000

Hope everyone is well!

EssexOstrich

Bit of a random question, but can anyone tell me if reducing your credit limits does any favours to your credit rating? If not, is there anything that does help it other than paying on time?

Thank you x

ThatKiss

With the usual caveat that credit scores are BS designed to sell you a product...

Credit utilisation is often used as a factor in how your credit is rated, so it can be beneficial to maintain higher limits to make that measure look more attractive. For example, a £15k debt on a £20k limit card shows utilisation of 75%, whereas if the limit was £25k the utilisation would be 60%.

The lower utilisation shows you're not spending the money available to you just because it's there which is obviously a good sign in terms of money management, but its overall effect on your credit score will depend on the algorithm in use by the particular CRA/lender.

If we're using credit scores as a marker, these will naturally rise as your debt decreases so how big a difference lowering your limits makes is probably negligible. I closed a card off earlier this year and my Credit Karma score dropped three points, for instance, while ClearScore and Experian remained steady. Are those three points going to make a difference? Very unlikely.

EssexOstrich

@ThatKiss Thank you, that's really helpful. I'm not a bit follower of my credit score but I didn't want to close too much down if it's going to be detrimental. My utilisation of credit cards is probably around 50%. For someone with a lot of debt and not a massive income I seem to have high limits!

ThatKiss

Ultimately I think you have to do what's right for you. If you feel more comfortable with lower limits then do so - any negative impact on your credit record will ultimately be short-lived. At 50% utilisation you likely have a bit of wiggle room to reduce without too much negative effect.

One thing worth mentioning though (I've not checked back through the thread), it may be worth leaving the limits as they are if you are looking for future 0% balance transfer offers. As your balances drop, you might find you get more/better offers from existing lenders which could save making a new credit application in future. Just something to bear in mind

savingholmes

I agree with the facility to transfer to other 0% rates if needed - however I think closing some and reducing the amount you can borrow - sends a positive psychological message to yourself that the borrowing has stopped increasing. This can be underlined by creating an emergency fund so it becomes your borrowing source not some outside element.

EssexOstrich

@ThatKiss and @savingholmes - thank you both for the advice. I've left it open for a potential BT offer as I have 2 deals expiring by the end of the year and don't really want to keep applying if I can help it. I have no physical card and no pin number so I feel quite safe having the account there.

I closed the big CC limit (£15k!) down at the start of this mission, the one that I've always consolidated and run back up with stupid spending and ended up paying almost as much interest as minimum payment. Although it may look good in terms of utilisation, it's definitely not good for my progress so made more sense to take the risk away.

EssexOstrich

In non-debt news, I've started a much needed diet! Looking at people's diaries, this seems to be the next step many take  I have an even poorer track record with diets than I do with debt so hoping some of my new motivation will rub off and help me shift a chin or 2.