Should I decrease credit?

ocelot20

Hey everyone,

I have a question. I have a lot of credit in my name and I am just wondering if I was to decrease it will that improve my credit score? So here is what I have. According to Credit Karma I have a score of 596 points which they say is fair.

My current credit is:

Virgin Credit card £2000 limit and currently have used £1,150. I wont be using this card any more. Just going to pay it off before the interest free period ends in 16 months time.

Barclays Credit Card: £600 limit and have spent noting. This was my first credit card used it for a years worth of interest free. Paid it off with a few months to spare. This does not get used now.

Paypal Credit: Just under £2000 limit. Used around £230 and have 9 months left of interest free period as it was a ebay purchase.

Very I have 2 of these one of them use to be woolworths online. Both with a £1500 limit. One I have the full credit available the other I have used £420 on and have 11 months interest free to pay it.

Studio this one is silly. Started off as £400 credit limit. But they kept raising the limit every few months. Until I realised there was a option to turn off auto credit limit rise. So I have currently like £1600 credit with them but have used none of it. I don't use them at all.

So I was thinking since I don't use Studio and I don't use the Barclays Credit card. Should I close them? Would this help raise my credit score or hurt it?

vacheron

This can really be a double edged sword.

If you ask for your your limits to be reduced right down, your level of credit utilisiation can go up, which some lenders see as a bad thing as it looks like you're running up to your maximum limits. Lenders would also be able to see that your credit limit has recently reduced, but not why, so they could think the lender has wound in your limit for some reason which could also give them cold feet!

However if you leave all your cards active, then your total amount of potential credit will remain high, which some lenders will also consider a bad thing as they wonder if you would be able to repay should you decide to go on a spending spree and max out all the credit you have.

So, In your position I would close the completely unused cards with low limits (very low limits could also look less than desirable to a potential lender), but keep the credit limits on the partially used cards exactly as they are now.

Keeping the studio card with the credit limit rising could also be seen as a good thing to potential lenders (this is who you want to impress if you need future credit, not the credit scoring agencies like Credit Karma, who's score frankly means nothing). 

[Deleted User]

You have very low limits, so keep all your accounts.

596 is the perfect score for someone in your circumstances.

cymruchris

Deleted_User said:

You have very low limits, so keep all your accounts.

596 is the perfect score for someone in your circumstances.

Totally agree with this - at this stage of demonstrating a positive credit history - don't close anything. Continue to work down that debt, and use all cards for at least a transaction or two a month, and then pay those without the balance in full by direct debit. You don't need to spend anything with Studio or Very (unless you actually want to) - but keep their credit line alive - as it demonstrates a better level of available credit, and a level of trustworthiness. Your card limits are still quite low, but if you keep buying a little and paying off in full often, you might find they begin to rise. Don't worry about whether your score goes up or down or sideways - it's really not important - it's more important that you demonstrate a good credit file history. 

yksi

Your limits aren't excessive at all. The usage percentage is probably more of a factor, and for you, it's still not worth worrying about. Just keep paying off your debts and keep up the good work.

Emmia

You've got about £7,500 spread across a number of accounts which isn't especially high (although it might be in relation to your income)

I'd probably streamline the accounts by closing one of the 2 Very accounts and if you're not using it the Studio account too - I'd leave the Barclaycard open though, and perhaps put a regular payment through it (paid off in full every month) e.g. one week's grocery shop, or a petrol purchase once a month - this will help to show providers you can manage this borrowing responsibly. 

ocelot20

Hi everyone,

Thanks for all the suggestions. So after reading everyone's replies. I take just leaving them open. With the credit card that I dont use. Use it once or twice a month and pay it off? I do have one or two take aways a month so I guess I can use it for that. So I shouldn't worry about limiting any of the credit stuff? For example Very and Studio both online catalogues do give you a option to request a increase of credit and decrease credit to any amount.

Thanks again.

phillw

ocelot20 said:
So I shouldn't worry about limiting any of the credit stuff?

I assume that lenders are like a suspicious partner.

If you try to do anything special to make yourself look good, they wonder what it is you are trying to hide.

They make money out of lending out money and getting it paid back, there is no benefit to them if they only lend to people who know the secret way of increasing their chances. They will either reject someone they shouldn't or lend to someone they shouldn't.

Alex9384

Can't you use the other cards too? Just spend £5 or £10 on them each month. Set up direct debits (if you haven't yet) so you don't need to worry about payments on time. With some current accounts (like NatWest Reward) you can even earn some money just for having those active direct debits.
Btw, have you tried to increase the limit on Barclaycard? £600 looks really low. Just log in and go to Account services > Change your credit limit. You can try it. It doesn't leave a 'hard search' on your credit files.

yksi

Barclay is tight-fisted these days. I've been with them for ages, always paid in full, and my limit is still only £800. Never mind that Amex once gave me five figures. Aqua has even been more generous in a faster time than Barclay has!

Alex9384

yksi said:

Barclay is tight-fisted these days. I've been with them for ages, always paid in full, and my limit is still only £800. Never mind that Amex once gave me five figures. Aqua has even been more generous in a faster time than Barclay has!

How much do you spend on it if I may ask?
I'm still paying off my Barclaycard balance (still on 0% purchase period) and not spending on it any more. About a month ago I manually increased the limit from £5000 to £6000 with no problem. I was a bit surprised because I don't really earn much. My salary has increased but it's still low for UK standards. They didn't even ask me for any proof. Same with American Express, I just increased the limit from £5400 to £6000 (I could have tried more) after having the card (my very first Amex) for 3 months.