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

D3xt3r5L4b

As above they see the marker. As can you on some CRA’s. 

A lender will never divulge why you failed on an application with them as their lending criteria is commercially sensitive and strictly confidential. Whomever you spoke to on the phone was likely just a call agent reading some form of scripted answer.

The fact that your score dropped and you were refused is a mere coincidence yes. They’re not related at all. The “score” probably dropped due to the new accounts being added and the balance being shown (albeit on a promo marker) but more than likely you because you opened two cards in quick succession and then tried to open a third.

Also what kind of balances are we talking here if they have to be spread over 3 BT cards?

Regadinf the score rejections - as I say some searches will show you people who have posted on here, and yes, many were refused with multiple lenders/providers/utility companies and not just the one red herring.

washtenaw

Deleted_User said:

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.

A promo marker ? So you're saying that one lender can see that you just opened a credit account from another lender that has a promotional offer ? I certainly havn't seen anything like this on my credit file. Do lenders only get to see this information ? As far as I'm concerned they only see when you opened the account, what your credit limit is, what your outstanding balance is, whether you've missed any payments and if a hard check was carried out when you applied. 

And once again, anyone who has just opened up a new credit card account with a 0% balance transfer offer and who has used up over 90% of its limit by making a balance transfer is definitely NOT going to be paying the balance off in full every month.

Example: Johnny opens up a new credit card account with a £5,000 credit limit and a 0% balance transfer offer for 24 months (which he must take advantage of in the first 60 days after opening the account) to transfer a balance from another one of his credit cards on which he is currently paying 20% APR. He then transfers the maximum amount allowed to this new card, £4,750. He then only needs to pay the minimum payment of 1% each month until the 0% interest free period ends in 24 months. Why would Johnny want to pay that balance of £4,750 off in full every month ? He absolutely would not want to, he would want to keep it for as long as possible !!!

But unfortunately Johnny has noticed that not only has his credit score dropped, but that the credit offers he is recieving from other lenders are not as good as they were before. As Johnny definitely doesn't want to pay off his balance in full every month and he wants to keep as much of it as possible for the next 24 months, he decides to pay off 5% now so that the balance is below 90%. Johnny doesn't know for sure if this will help him get better credit offers from lenders in the future, but it was only £250, so he determined that this small sacrifice is at least worth the possibility of improved offers.

[Deleted User]

washtenaw said:

Deleted_User said:

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.

A promo marker ? So you're saying that one lender can see that you just opened a credit account from another lender that has a promotional offer ? 

That's correct. It's a key factor in assessing affordability.  The difference in risk profile of someone chipping away at a 0% balance, compared to someone struggling to clear an interest bearing balance is very significant.  

And I haven't disagreed that you, Johnny, or anyone else would want to make more than minimum payments on a 0% balance. It would make no sense.

Yahoo_Mail

washtenaw said:

Deleted_User said:

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.

A promo marker ? So you're saying that one lender can see that you just opened a credit account from another lender that has a promotional offer ? I certainly havn't seen anything like this on my credit file. Do lenders only get to see this information ? As far as I'm concerned they only see when you opened the account, what your credit limit is, what your outstanding balance is, whether you've missed any payments and if a hard check was carried out when you applied. 

It's possible the services like Clearscore, Credit Club and the like choose not to show it (although Credit Karma does) but if you order your statutory report direct from the CRA, it'll definitely be on there.

D3xt3r5L4b

You’re correct - Johnny wouldn’t pay the full balance on a promo balance, however Jimmy who is just paying his usual monthly expenditure would (should). 

Again the drop in “score” is insignificant and unrelated from a lenders POV, as is having a 90% balance, 95% balance or a 100% balance. 

TheStoozeFather

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. 

No correlations at all isn't exactly true, but agree on points made about promo periods, and that people shouldn't really worry about their CRA scores.

Yorkshire_Pud

As OP thanks for all the comments.
My available credit is more than double my income even though my overall credit utilisation is 30% which is about 75% of my income.

One problem I am still struggling to resolve with Experian is that since March they have shown my 0% purchases card on which I reached 99% of available credit but still has another eight months of promo period shows as N out of promo on my credit report. Apparently, and I don’t know who is to blame, the lender sends a monthly status to Experian and Experian say they are being told it’s out of promo period so that’s what they report on my file. The bank/lender confirmed to me and Experian that the 0% period is still running and that is correct I make minimum payment and I don’t pay interest. Experian say they can only report what they are being told monthly. The lender says they are reporting it’s in a promo period or Y on the report! This has been going on for about four months since I flagged it up and nothing has changed. 

D3xt3r5L4b

Yorkshire_Pud said:

As OP thanks for all the comments.
My available credit is more than double my income even though my overall credit utilisation is 30% which is about 75% of my income.

One problem I am still struggling to resolve with Experian is that since March they have shown my 0% purchases card on which I reached 99% of available credit but still has another eight months of promo period shows as N out of promo on my credit report. Apparently, and I don’t know who is to blame, the lender sends a monthly status to Experian and Experian say they are being told it’s out of promo period so that’s what they report on my file. The bank/lender confirmed to me and Experian that the 0% period is still running and that is correct I make minimum payment and I don’t pay interest. Experian say they can only report what they are being told monthly. The lender says they are reporting it’s in a promo period or Y on the report! This has been going on for about four months since I flagged it up and nothing has changed. 

Are you looking at your report direct from Experian or via a third-party?

Yorkshire_Pud

From Experian directly.

mrkds

I was following this thread out of interest. Didn't know about the promo marker. I checked mine out of curiosity (via Credit Karma). I have two credit cards currently in their 0% promo period (one maxed out, the other about 50% - both with still a good few months left). However,  on the "promotional rate" field on the credit report they both say "No". Just wondering what to make of this? Is this normal? Do I need to contact the credit agency to correct it?