Reducing credit limit and credit score impact

mhla200

Hi All

We are about to complete a purchase of a home and all credit checks have been done. I have a credit card balance of £3500 and Buy Now Pay Later credit of £1500. I am looking to reduce credit card balance to £1000 and leave BNPL credit as it is as we use this for house stuff like TVs, Fridge, Stove etc. I know I will take a hit on my score but how long will it take for my score to go back to acceptable level. Is this also a good idea as I am not looking to apply for a credit for a while. 

When using the Buy Now Pay Later no credit check is done so I feel its good as long as we pay in time with the 0 interest than having to use a credit card and paying interest.

[Deleted User]

Your score probably won't move back up, but that's ok. It's not a factor in lending.

More of an issue is why you want to lower your limits. Lenders will assess you on your existing credit. Dropping limits, especially when they're already low, isn't generally a good idea, as it shows that either lenders don't trust you or you don't trust yourself with credit.

Unless you have real self control issues, leave the limits as they are. And definitely don't make any changes until you complete on the home, as last minute checks can be run.

mhla200

Deleted_User said:

Your score probably won't move back up, but that's ok. It's not a factor in lending.

More of an issue is why you want to lower your limits. Lenders will assess you on your existing credit. Dropping limits, especially when they're already low, isn't generally a good idea, as it shows that either lenders don't trust you or you don't trust yourself with credit.

Unless you have real self control issues, leave the limits as they are. And definitely don't make any changes until you complete on the home, as last minute checks can be run.

Thank you, I feel the limit of £5000 is too high and I don't usually use the credit card itself but mainly use the BNPL but it also appears as a 2nd credit card in my credit report and that's bugging me. The plan was to leave it until the home purchase is complete. I did drop it in the past and the bloody bank increased it again as I missed a letter telling me they were increasing it so I missed an opportunity to say NO. So you say I should leave it like that and maybe tear the credit card apart. I am looking at more doing savings than even having that £3500 credit card?

[Deleted User]

If you don't trust yourself, then cut the card up. But then you've denying yourself the chance to continue to build good history by no longer using it.

Ideally, from a credit file perspective, you'd keep the accounts, use the card regularly, allow future increases and get another card or two. But if you think you'll get into trouble by have credit available to you, better to close them.

mhla200 said:

I am looking at more doing savings than even having that £3500 credit card?

I'm not sure what that means.

mhla200

Deleted_User said:

If you don't trust yourself, then cut the card up. But then you've denying yourself the chance to continue to build good history by no longer using it.

Ideally, from a credit file perspective, you'd keep the accounts, use the card regularly, allow future increases and get another card or two. But if you think you'll get into trouble by have credit available to you, better to close them.

mhla200 said:

I am looking at more doing savings than even having that £3500 credit card?

I'm not sure what that means.

Okay thank you for your help.

[Deleted User]

While having 2-3 months of salary as savings is a good idea (virgin current account pays 2% on £1000 for example), using the credit card is no bad thing, I'd leave the limit at £5000 and just use it for the S75 protection even if you only spend £100 a month