Income to Debt Query

mancdude

Hello all, 
Quick question on "income to Debt" ratio. Does this take into account the credit limit itself of existing credit cards, or just the balance outstanding?

I have a CC that is completely clear, but with a high limit. I'm not sure if I should close it down? If it's impacting the "ratio" then I'll close the account, but if it doesn't I'll keep it open as it's a long running relationship. 

I ask as my "score" on credit records is pretty much in the top across all, but my debt to income ratio is saying its very high at the moment - I'm working to clear down other debts to improve this. 

Any clarity would be appreciated, 
Thanks. 

PRAISETHESUN

Ignore your "score" - lenders don't see or use it.

Every lender has their own criteria about how much credit is too much. It's the total combined limits as in theory you could max out every credit card tomorrow and have to service that on top of any new credit you might be offered. There's no hard or fast rule, generally it's advised to keep a hold of credit limits you already have unless you are at risk of running up debt. Having lots of credit that you manage responsibly is generally a positive thing in the eyes of lenders.

mancdude

Thanks for that, appreciate the reply. We've got approx. 18 months until we need to look at remortgaging so I'm doing some housekeeping to look as good as possible. I'll keep on to the card then and not use it in the interim. 

MattMattMattUK

mancdude said:

I'll keep on to the card then and not use it in the interim. 

Use the card, just make sure you pay it in full every month.