Credit Utilisation Query

Superhoopza

Hi,

I have multiple credit cards that I'm in a position to slowly start putting a dent into. I am trying to work towards lowering my credit Utilisation, as that is the only factor preventing me getting some more attractive finance options, to be able to ease the interest currently being applied.

I had a query, my credit reports show total credit card utilisation and individual card utilisation. Do creditors generally look at total utilisation or look for any accounts with high utilisation. I.e. am I better clearing off the highest interest cards first, reducing the utilisation there, or reduce the utilisation on all my cards so that none are specifically high? To repeat, my short term goal is to be able to get an attractive balance transfer card or consolidation loan to be able to massive reduce the monthly interest im paying each month.

Thanks

[Deleted User]

They'll take a holistic view of your accounts.

Clear the highest rate debt first.

MattMattMattUK

Superhoop91 said:

Hi,

I have multiple credit cards that I'm in a position to slowly start putting a dent into. I am trying to work towards lowering my credit Utilisation, as that is the only factor preventing me getting some more attractive finance options, to be able to ease the interest currently being applied.

Credit utilisation is one of many factors that influence what products are offered to you, I doubt it is the only one as total debts and affordability will be far higher factors, with credit utilisation coming so low down the list as to be irrelevant in most circumstances. 

Superhoop91 said:

I had a query, my credit reports show total credit card utilisation and individual card utilisation. Do creditors generally look at total utilisation or look for any accounts with high utilisation. I.e. am I better clearing off the highest interest cards first, reducing the utilisation there, or reduce the utilisation on all my cards so that none are specifically high? To repeat, my short term goal is to be able to get an attractive balance transfer card or consolidation loan to be able to massive reduce the monthly interest im paying each month.

Thanks

In reality they do not care what your utilisation is, they care about your total debt, your affordability and your payment records. As an example if you had £50k of credit card debt on cards with limits of £55k that would not really be treated any differently to a debt of £50k with credit limits of £100k, similarly someone with £500 of debt on a £550 limit card vs £500 limit on a £5,000 card would also have little bearing, if their income showed the ability to repay the total debt (which they will count as the existing debt, plus any new line of credit they may extend) then they would be willing to lend.

When it comes do debts you are almost always better off paying the debt which has the highest interest first.

They key questions are, how much do you earn, how much do you owe and what kind of payments are you making on a monthly basis, eg. are you just paying the minimum, are you overpaying a little, by a significant amount? 

molerat

Creditors will look at your overall debt and overall utilisation, a single high % card will unlikely cause any problems as long as the overall picture is reasonable. Overall indebtedness and rate of paying down will be the biggest factor. Payments should generally always be maximised towards the highest interest debt.

Superhoopza

Very useful, thank you all. The debt is coming down slowly, reducing my interest paid each month will help that (among other things). 

Naomim

Maybe you should pop over to the Debt Free Wannabe board.  They can look at your income/expenditure and give you some tailored advice on how to tackle the debts and maybe free up some money for overpayments.

Superhoopza

Thanks but I'm fine. Been managing my money, planning, budgeting etc for over a year now. Just trying to reduce my monthly interest which was at £300 a month