Sensible credit utilisation % of a 0% balance transfer credit card?

Yorkshire_Pud

My overall CUR across all my credit cards is about 30% which I understand is about right for lenders. However that masks the fact that I have three cards with CUR of 50%, 90% and 95% and others with a few pounds credit used and paid off.

My credit score has been tumbling, I know that’s just a figure for CRA marketing but my last card was at a significantly higher interest rate 27% and for only 12months when the offer was up to 18 months. That’s a 0% purchases card and I make the minimum monthly payment.

Am I being stupid running things like this?!

With all the exhortations by Martin et al to shift debt to 0% cards does that sensibly mean you should still only utilise 30% of the available balance? That seems pointless to me as it would be only £1800 on a card with available balance of £6000 and allowance of max 95% of limit so £5400. I’ve done the £5400! 

Please feel free to tell me if I’m being less than sensible doing this. I am in a position to pay of much of the credit off as I want.

[Deleted User]

Transfer as much as you want. Utilisation isn't a particular concern on 0% BTs - and vastly better than keeping it interest bearing elsewhere.

Just focus on getting the debt as a whole down.

Yorkshire_Pud

Deleted_User said:

Transfer as much as you want. Utilisation isn't a particular concern on 0% BTs - and vastly better than keeping it interest bearing elsewhere.

Just focus on getting the debt as a whole down.

Thanks that’s what I hoped. Strangely I never see anything written about CUR of 0% balance transfers.

Is utilisation % a concern on 0% purchases cards though?

Your second point may be closer to my recent problems as the total amount of debt on 0% cards is getting close to my annual income. Paid off two 0% cards this week and won’t attempt to open any more 0% balance transfer cards for about two years.

washtenaw

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

D3xt3r5L4b

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

washtenaw

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

D3xt3r5L4b

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

Again, if you're paying your balance in full each month then utilisation is a moot point as the statement balance from month A and the payment received in month B will balance everything out.

Not paying a balance in full does give this "view of desperation", yes. 

As for the comment on "most cards only allowing you to use 95% of your limit" - where are you reading that? I've maxed out cards before with purchases (either in one go or over the course of a month) and then repaid in full upon production of the statement - I've never been stopped from using 100% of the available limit to use nor have I been refused credit whilst doing so.

And again, CRA scores are in no way indicative of anything - <insert usual responses> - bankrupts getting 999 scores, people with 999 scores being refused phone contracts, but people with 300/400 scores getting 6-figure mortgages....

washtenaw

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

Again, if you're paying your balance in full each month then utilisation is a moot point as the statement balance from month A and the payment received in month B will balance everything out.

Not paying a balance in full does give this "view of desperation", yes. 

As for the comment on "most cards only allowing you to use 95% of your limit" - where are you reading that? I've maxed out cards before with purchases (either in one go or over the course of a month) and then repaid in full upon production of the statement - I've never been stopped from using 100% of the available limit to use nor have I been refused credit whilst doing so.

And again, CRA scores are in no way indicative of anything - <insert usual responses> - bankrupts getting 999 scores, people with 999 scores being refused phone contracts, but people with 300/400 scores getting 6-figure mortgages....

In relation to paying off your balance every month, this doesn't specifically apply to long term 0% balance transfer cards like the thread starter refers to. The point of those cards is to hold that balance for as long as the offer is good for, in some cases up to 36 months. So in order to take advantage of the 0% interest rates, you absolutely do NOT want to pay off your balance in full every month. You only want to pay the minimum payment.

But in other circumstances, I have no idea if paying off your balance in full every month will effectively compensate for regularly exceeding 90% of your limit. Nevertheless, I still believe it's a very wise idea to stay below 90% at all times if you can manage it. It will certainly only help and definitely not hurt your situation. 

And in regards to only being able to use 95% of your limit, that only applies to balance transfers (as the thread starter specifically referred to) and not purchases. No card (as far as has ever been my experience) will ever allow you to transfer 100% of the limit because they need to leave room for transfer fees that are typically 3% or any other fees/penalties you may accrue. And actually even when there is no transfer fee, I still have found that they limit you to only 95% anyway. 

And then of course regarding the credit scores, yes absolutely, people who are bankrupt can get perfect scores, people with perfect scores can get refused credit. This absolutely does happen, and I am not at all contesting this. But these examples are very rare outliers, they can happen, but they rarely do. On average, most people with overall low credit scores across all three major credit referencing agencies will get much worse credit offers from lenders then people with much higher overall credit scores. To say there is absolutely no correlation between credit score and credit offers from lenders is ridiculous. The only thing that people should know is that lenders do NOT actually look at your credit score, they only look at factors like your overall credit limit and your overall credit utilisation which are exactly what the credit reference agencies use to determine your credit score in the first place. So in a sense, credit scores, are kind of like 'mock' applications. They give you an 'idea' of how lenders will potentially see you, but they are in no way anywhere near 100% accurate because every lender has such drastically different criteria for assessing applicants.

D3xt3r5L4b

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

Again, if you're paying your balance in full each month then utilisation is a moot point as the statement balance from month A and the payment received in month B will balance everything out.

Not paying a balance in full does give this "view of desperation", yes. 

As for the comment on "most cards only allowing you to use 95% of your limit" - where are you reading that? I've maxed out cards before with purchases (either in one go or over the course of a month) and then repaid in full upon production of the statement - I've never been stopped from using 100% of the available limit to use nor have I been refused credit whilst doing so.

And again, CRA scores are in no way indicative of anything - <insert usual responses> - bankrupts getting 999 scores, people with 999 scores being refused phone contracts, but people with 300/400 scores getting 6-figure mortgages....

In relation to paying off your balance every month, this doesn't specifically apply to long term 0% balance transfer cards like the thread starter refers to. The point of those cards is to hold that balance for as long as the offer is good for, in some cases up to 36 months. So in order to take advantage of the 0% interest rates, you absolutely do NOT want to pay off your balance in full every month. You only want to pay the minimum payment.

But in other circumstances, I have no idea if paying off your balance in full every month will effectively compensate for regularly exceeding 90% of your limit. Nevertheless, I still believe it's a very wise idea to stay below 90% at all times if you can manage it. It will certainly only help and definitely not hurt your situation. 

And in regards to only being able to use 95% of your limit, that only applies to balance transfers (as the thread starter specifically referred to) and not purchases. No card (as far as has ever been my experience) will ever allow you to transfer 100% of the limit because they need to leave room for transfer fees that are typically 3% or any other fees/penalties you may accrue. And actually even when there is no transfer fee, I still have found that they limit you to only 95% anyway. 

And then of course regarding the credit scores, yes absolutely, people who are bankrupt can get perfect scores, people with perfect scores can get refused credit. This absolutely does happen, and I am not at all contesting this. But these examples are very rare outliers, they can happen, but they rarely do. On average, most people with overall low credit scores across all three major credit referencing agencies will get much worse credit offers from lenders then people with much higher overall credit scores. To say there is absolutely no correlation between credit score and credit offers from lenders is ridiculous. The only thing that people should know is that lenders do NOT actually look at your credit score, they only look at factors like your overall credit limit and your overall credit utilisation which are exactly what the credit reference agencies use to determine your credit score in the first place. So in a sense, credit scores, are kind of like 'mock' applications. They give you an 'idea' of how lenders will potentially see you, but they are in no way anywhere near 100% accurate because every lender has such drastically different criteria for assessing applicants.

I said that in my first reply: “If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter.”

And it’s not wise advise at all really - you’re just bowing down to the CRA’s marketing advice which is complete twaddle as they are not lenders. 

And run some searches on here and you’ll be inundated with threads from people with max scores and getting refused credit.
No correlations at all. 

washtenaw

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

Again, if you're paying your balance in full each month then utilisation is a moot point as the statement balance from month A and the payment received in month B will balance everything out.

Not paying a balance in full does give this "view of desperation", yes. 

As for the comment on "most cards only allowing you to use 95% of your limit" - where are you reading that? I've maxed out cards before with purchases (either in one go or over the course of a month) and then repaid in full upon production of the statement - I've never been stopped from using 100% of the available limit to use nor have I been refused credit whilst doing so.

And again, CRA scores are in no way indicative of anything - <insert usual responses> - bankrupts getting 999 scores, people with 999 scores being refused phone contracts, but people with 300/400 scores getting 6-figure mortgages....

In relation to paying off your balance every month, this doesn't specifically apply to long term 0% balance transfer cards like the thread starter refers to. The point of those cards is to hold that balance for as long as the offer is good for, in some cases up to 36 months. So in order to take advantage of the 0% interest rates, you absolutely do NOT want to pay off your balance in full every month. You only want to pay the minimum payment.

But in other circumstances, I have no idea if paying off your balance in full every month will effectively compensate for regularly exceeding 90% of your limit. Nevertheless, I still believe it's a very wise idea to stay below 90% at all times if you can manage it. It will certainly only help and definitely not hurt your situation. 

And in regards to only being able to use 95% of your limit, that only applies to balance transfers (as the thread starter specifically referred to) and not purchases. No card (as far as has ever been my experience) will ever allow you to transfer 100% of the limit because they need to leave room for transfer fees that are typically 3% or any other fees/penalties you may accrue. And actually even when there is no transfer fee, I still have found that they limit you to only 95% anyway. 

And then of course regarding the credit scores, yes absolutely, people who are bankrupt can get perfect scores, people with perfect scores can get refused credit. This absolutely does happen, and I am not at all contesting this. But these examples are very rare outliers, they can happen, but they rarely do. On average, most people with overall low credit scores across all three major credit referencing agencies will get much worse credit offers from lenders then people with much higher overall credit scores. To say there is absolutely no correlation between credit score and credit offers from lenders is ridiculous. The only thing that people should know is that lenders do NOT actually look at your credit score, they only look at factors like your overall credit limit and your overall credit utilisation which are exactly what the credit reference agencies use to determine your credit score in the first place. So in a sense, credit scores, are kind of like 'mock' applications. They give you an 'idea' of how lenders will potentially see you, but they are in no way anywhere near 100% accurate because every lender has such drastically different criteria for assessing applicants.

I said that in my first reply: “If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter.”

And it’s not wise advise at all really - you’re just bowing down to the CRA’s marketing advice which is complete twaddle as they are not lenders. 

And run some searches on here and you’ll be inundated with threads from people with max scores and getting refused credit.
No correlations at all. 

Yes, you said 'OR on a 0% promo'. Other lenders don't know if that card is a 0%  promo card, how could they ? What they DO know is that that card is consistently over 90% utilisation and that it's not being paid off in full each month (no one with a 0% balance transfer promo rate is going to pay it off in full each month).

Last year, I opened up two new credit accounts and on both of them I quickly used up over 90% of their limits to take advantage of their 0% balance transfer offers. Soon after, I applied for a balance transfer on another pre-existing card and my application kept getting rejected. I had to call up the lender and it took them a while to figure out what was going on, but eventually they told me that they had recently received information from Experian/Equifax that caused them to withdraw that balance transfer offer. At that same time, my credit scores for all three credit agencies took a significant plunge. Now I really can't say for sure what went on then, but that was the first time that I had ever gone over 90% utilisation on any of my cards and directly after that was the first time I was ever refused a balance transfer. Coincidence ? Perhaps ? Maybe it was simply because I recently opened 2 new credit accounts. But I will always stay below 90% on all my cards from now on. 5% to 10% is not a massive amount even on cards with larger limits, and like I said it absolutely can not hurt but it likely will help.

And with these people on perfect scores getting refused credit, I mean I'm sure it happens, but is this perhaps just the one random application that they've been refused when they've been accepted for everything else  ? The things is, people with perfect scores are much more likely to come to a forum like this and ask why they were rejected for credit as opposed to people with poor scores who were also refused. I still believe those cases are outliers, i.e. most people with significantly higher credit scores will usually get better credit offers from lenders than those with significantly worse credit scores. 

[Deleted User]

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

D3xt3r5L4b said:

washtenaw said:

In my opinion, NEVER go above 90% credit utilisation on any one card. I am certain that is a major red flag for both credit scoring agencies and lenders. Make sure it is always just below 90%, even 89.95% should be fine. 

If your overall credit ultilisation across all cards is less than 30% then that's great, however I think you can relatively safely get up to 50%.

. . . but that also depends on a number of factors as well. For example if your stated salary is £25k a year, and have a total credit limit of £30k across all your cards and are using 50% of you total limit i.e. £15k, than that is more than half of your annual salary and this does not look good to lenders. Everything is relative of course, so on the other hand if you only have a total credit limit of £10k and are using half of that i.e. £5k, then that is only 20% of your stated annual salary of £25k and will naturally look much better. For your specific situation, you claim that your debt on your 0% cards is the same as your annual salary, and I'm afraid to say that that probably looks quite bad to lenders. From their perspective, how will you ever pay that off if you only make that much in one year, and why would they want to give you any more credit in such a scenario ?

I had a situation last year where I got two new credit cards and used more than 90% on both of them in order to take full advantage of their 0% balance transfer offers, then shortly after that I  attempted to make another balance transfer on a pre-existing credit card and it wouldn't go through, it kept getting rejected. I called the lender and they told me that there had been a change in my Experian/Equifax score and that the balance transfer offer had been withdrawn as a result even though it was still showing on my internet banking. I can't say for sure exactly what caused this but it's likely that opening up two new credit card accounts and using over 90% on both of them is the reason. This likely would have given the impression to the lender that I was desperate for credit and they tend to be extremely cautious in these situations.

I reduced all my cards to below 90% and I did in fact see an improvement in my score soon after, although I can't be entirely sure how much of any impact this had overall.

The credit scoring algorithms used by credit agencies and lenders can be very finicky. If you know where the 'cut-off' points are, for example I believe 90% credit ultilisation on any one card is definitely one of them, staying just below that can ultimately make all the difference i.e. using just 89% on any one card as opposed to 91% can avoid you 'tripping' the algorithms, especially if it's a brand new card. Lenders will definitely look at this when deciding to give you credit i.e. what your salary is, what you total credit limit is, what you total credit utilisation is, what your credit utilisation is on each individual card, have you opened any new cards recently and the average age of all your cards . All of this information is held by each of the credit scoring agencies and the lender will be able to check this almost instantaneously when they assess your application. Bear in mind though that this information can be at least up to 3 months out of date, so for example if you do reduce the utilisation on that one card to less than 90%, it can take a while for it to be reported to the credit agencies.

If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter. 

Also the credit score and rating you refer to is highly irrelevant as lenders use their own unique and commercially sensitive systems to match you against a product/offer/etc. 

No, I definitely believe that utilising more than 90% of your credit on any card under any circumstances is bad for both your credit score AND for how potential lenders see you.

It may not mean that you are necessarily refused credit as a result, but it will certainly increase the chances of that happening.

It gives the impression to lenders that you are desperate for credit and/or are struggling financially, so they will class you as a much higher risk. Most cards will only ever let you use up to about 95% of your limit anyway, so I think it's a rather wise idea to drop that just 5% in order to increase your chances of receiving better credit offers in the future.

In regards to credit scores, I fully understand that no lender actually ever sees them, but the scores are in fact based on various factors that lenders absolutely do see. Generally speaking, a higher credit score 'usually' (but definitely not 'always') means that you will have a much better chance of being approved for credit and at better rates. Every credit referencing agency has its own unique methods of scoring you, just as each lender has its own unique methods as well. So for example if your credit score on all three major credit referencing agencies (Experian/Equifax/TransUnion) has risen significantly due to reducing credit utilisation rates on each of your individual cards to below 90%, then it would be logical to expect to receive better credit offers from lenders. This is not guaranteed of course, but credit scores do indicate that you are heading the right direction, they are not entirely irrelevant.

But more importantly though is the information that lenders can see, and they definitely CAN see your overall credit utilisation rate as well as your credit utilisation rate on each individual card. They may or may not make a decision to offer you credit based on these factors, but as there is absolutely no way of knowing what they look at, it's always a very good idea to stay on the safe side of things.

Again, if you're paying your balance in full each month then utilisation is a moot point as the statement balance from month A and the payment received in month B will balance everything out.

Not paying a balance in full does give this "view of desperation", yes. 

As for the comment on "most cards only allowing you to use 95% of your limit" - where are you reading that? I've maxed out cards before with purchases (either in one go or over the course of a month) and then repaid in full upon production of the statement - I've never been stopped from using 100% of the available limit to use nor have I been refused credit whilst doing so.

And again, CRA scores are in no way indicative of anything - <insert usual responses> - bankrupts getting 999 scores, people with 999 scores being refused phone contracts, but people with 300/400 scores getting 6-figure mortgages....

In relation to paying off your balance every month, this doesn't specifically apply to long term 0% balance transfer cards like the thread starter refers to. The point of those cards is to hold that balance for as long as the offer is good for, in some cases up to 36 months. So in order to take advantage of the 0% interest rates, you absolutely do NOT want to pay off your balance in full every month. You only want to pay the minimum payment.

But in other circumstances, I have no idea if paying off your balance in full every month will effectively compensate for regularly exceeding 90% of your limit. Nevertheless, I still believe it's a very wise idea to stay below 90% at all times if you can manage it. It will certainly only help and definitely not hurt your situation. 

And in regards to only being able to use 95% of your limit, that only applies to balance transfers (as the thread starter specifically referred to) and not purchases. No card (as far as has ever been my experience) will ever allow you to transfer 100% of the limit because they need to leave room for transfer fees that are typically 3% or any other fees/penalties you may accrue. And actually even when there is no transfer fee, I still have found that they limit you to only 95% anyway. 

And then of course regarding the credit scores, yes absolutely, people who are bankrupt can get perfect scores, people with perfect scores can get refused credit. This absolutely does happen, and I am not at all contesting this. But these examples are very rare outliers, they can happen, but they rarely do. On average, most people with overall low credit scores across all three major credit referencing agencies will get much worse credit offers from lenders then people with much higher overall credit scores. To say there is absolutely no correlation between credit score and credit offers from lenders is ridiculous. The only thing that people should know is that lenders do NOT actually look at your credit score, they only look at factors like your overall credit limit and your overall credit utilisation which are exactly what the credit reference agencies use to determine your credit score in the first place. So in a sense, credit scores, are kind of like 'mock' applications. They give you an 'idea' of how lenders will potentially see you, but they are in no way anywhere near 100% accurate because every lender has such drastically different criteria for assessing applicants.

I said that in my first reply: “If you’re paying in full each month or on a 0% promo then utilisation doesn’t matter.”

And it’s not wise advise at all really - you’re just bowing down to the CRA’s marketing advice which is complete twaddle as they are not lenders. 

And run some searches on here and you’ll be inundated with threads from people with max scores and getting refused credit.
No correlations at all. 

Yes, you said 'OR on a 0% promo'. Other lenders don't know if that card is a 0%  promo card, how could they ? 

They know because of the promo marker.

Utilisation really isn't an issue when cleared in full.