Total credit v credit utilisation

unhappyNCP

I am currently using 44% of the total credit available to me, through three credit cards.  Two other credit cards have zero balance, amounting to £22,000 of unused credit.  One card company has now written to me, stating it intends to close this account in two months time, unless I request otherwise.  At the same time, my affordability score on MSE Credit Club/Experian is weak - I already have a lot of credit available so would have high monthly repayments if I suddenly chose to utilise it.  I wish to make an application for some modest additional borrowing on my mortgage, to fund some home improvements.  My question is, is it "better" to be using a lower proportion of my available credit, or to have a lower total amount of credit available?

[Deleted User]

Keep your limits but reduce the debt.

[Deleted User]

The CRAs claim that having more than 50% utilisation is bad, whether that's bad from a lender's view or in terms of the mythical score is debatable. I would ensure I had less than 50% as it looks like you are managing credit but aside from BT cards with a promotional rate, I wouldn't be carrying debt that you are paying for e.g. paying less than the full balance every month on any card paying interest as that makes it look like you have money problems.

unhappyNCP

I’m carrying balance on two cards, and paying a tiny amount over minimum each months, then have one other with a balance at a low but not zero interest rate. Minimum payment on that is £85 per month but I’m paying off £500 so that will be clear by November 2021. 

I don’t need and have no plan to use my other two cards so can easily leave them dormant. Equally, if Nationwide would see £22,000 as a risk to any additional mortgage borrowing, I’ll happily bin the unused cards.  It’s knowing Nationwide’s attitude that is the crux, and also the great unknown (at least to me). 

2021BJ

unhappyNCP said:

I’m carrying balance on two cards, and paying a tiny amount over minimum each months, then have one other with a balance at a low but not zero interest rate. Minimum payment on that is £85 per month but I’m paying off £500 so that will be clear by November 2021. 

I don’t need and have no plan to use my other two cards so can easily leave them dormant. Equally, if Nationwide would see £22,000 as a risk to any additional mortgage borrowing, I’ll happily bin the unused cards.  It’s knowing Nationwide’s attitude that is the crux, and also the great unknown (at least to me). 

I suspect the balance you're carrying is far more of a risk to your additional borrowing than the limits.

[Deleted User]

Nationwide have their own lending criteria, they won't tell you what it is as that would allow you to game the system - they might prefer you had less potentially available credit that you could run up, but equally they might prefer that your utilisation is lower and thus keeping the cards open is better. Perhaps neither or both. Point is, you can't tweak your credit to try and get more money.

In terms of borrowing, it's not clear if you mean your 2 cards with balance are BT cards (which have a promotional rate flag so are treated a bit differently) or cards you pay interest on. If the former, it's probably more likely you will get the lending though they may want you to pay it down. If the latter, they will look at the way it appears you can't afford to pay off your cards every month (how your credit record makes you look, not saying you couldn't) and are accruing interest every month which suggests money troubles hence less likely to lend.

Do either of your unused cards have balance transfer offers you could use?

MattMattMattUK

unhappyNCP said:

I am currently using 44% of the total credit available to me, through three credit cards.  Two other credit cards have zero balance, amounting to £22,000 of unused credit.  One card company has now written to me, stating it intends to close this account in two months time, unless I request otherwise.  At the same time, my affordability score on MSE Credit Club/Experian is weak - I already have a lot of credit available so would have high monthly repayments if I suddenly chose to utilise it.  I wish to make an application for some modest additional borrowing on my mortgage, to fund some home improvements.  My question is, is it "better" to be using a lower proportion of my available credit, or to have a lower total amount of credit available?

You are carrying around £17,300 of unsecured debt, that will have a far bigger impact on your ability to borrow more on your mortgage than utilisation or total credit card borrowing, you may struggle, or indeed find it impossible to borrow more on your mortgage until you have repaid a significant proportion of that credit card debt. 

unhappyNCP

MattMattMattUK said:

unhappyNCP said:

I am currently using 44% of the total credit available to me, through three credit cards.  Two other credit cards have zero balance, amounting to £22,000 of unused credit.  One card company has now written to me, stating it intends to close this account in two months time, unless I request otherwise.  At the same time, my affordability score on MSE Credit Club/Experian is weak - I already have a lot of credit available so would have high monthly repayments if I suddenly chose to utilise it.  I wish to make an application for some modest additional borrowing on my mortgage, to fund some home improvements.  My question is, is it "better" to be using a lower proportion of my available credit, or to have a lower total amount of credit available?

You are carrying around £17,300 of unsecured debt, that will have a far bigger impact on your ability to borrow more on your mortgage than utilisation or total credit card borrowing, you may struggle, or indeed find it impossible to borrow more on your mortgage until you have repaid a significant proportion of that credit card debt. 

Yes, that’s a clear weakness in my position and I’m addressing that as a matter of urgency by paying off some £750 per month. Now trying to see what else I can do to make myself as attractive a proposition as possible. 

unhappyNCP

Good question about any BT offers on my unused cards - one sends me regular statements but no offers; the other is the card that is so unused it’s proposed by Barclaycard to close it. In both cases though there’s no harm in asking if they’ve any NT offers available .

The balances on my other two other active cards are both at 0% and I’m using all BT offers that come through, to transfer from my low interest card account. 

unhappyNCP

2021BJ said:

I suspect the balance you're carrying is far more of a risk to your additional borrowing than the limits.

I suspect that’s right, and I’m already addressing that as a priority.