Increasing Credit Card Limit

Vidsify

Hi. I’ve been informed by my Credit Card Provider that I’m eligible to increase my available limit on the card. I’m in two minds to do it or not as I’m not sure if it affects my credit score taking a large portion of my available total limit. I’ve never gone over my limit now and I’ve always paid in full well before the payment is due. Any advice would be great. Cheers 

Ebe_Scrooge

If anything, accepting an increase would most likely reduce your score, as it represents a change in your credit circumstances.  Thankfully, your score means absolutely nothing to a lender - it's not used in lending decisions, and in actual fact is not even seen by a lender.

However, an increased limit will make you look more favourable in the eyes of lenders - it shows them that other lenders are prepared to trust you with a larger limit.  So long as you can trust yourself not to spend more than you can afford (just like speed limits on the road, it's a limit, not a target!), and so long as you continue to repay in full every month, then it's a positive tick on your credit history.

400ixl

Would it also not make other lenders look less favourably. There is a credit line there that you could use at any time and as such they need to take that into account with what they would supply on top of that.

Ebe_Scrooge

That's a fair question.  But in general, unless your available credit is many times more than your income, then more is better   With the very important caveat, to reiterate my first point - don't use it just because it's there, never look upon it as a reason to overstretch yourself, never buy what you cannot afford.

Thrugelmir

Do you need an increased limit?  No extra points for vanity. 

[Deleted User]

400ixl said:

Would it also not make other lenders look less favourably. There is a credit line there that you could use at any time and as such they need to take that into account with what they would supply on top of that.

That isn't really how they work, it is logical but contrary to the logic, the more credit you have (so long as it's well managed, paid in full every month), the more you are likely to get as you are seen as trustworthy. Firms have to assume you're not going to open up 3x your income in credit then fill it up and run off without paying if you've not done that for the past 6 years

cymruchris

I would certainly take a credit limit increase if offered. Having it doesn't mean you have to use it to the limit - it just shows they trust you more now than when you originally took out the card. It's nice to have a buffer for a genuine life and death emergency - even if it never gets used other than your regular spend as you're doing now.

Nebulous2

Deleted_User said:

400ixl said:

Would it also not make other lenders look less favourably. There is a credit line there that you could use at any time and as such they need to take that into account with what they would supply on top of that.

That isn't really how they work, it is logical but contrary to the logic, the more credit you have (so long as it's well managed, paid in full every month), the more you are likely to get as you are seen as trustworthy. Firms have to assume you're not going to open up 3x your income in credit then fill it up and run off without paying if you've not done that for the past 6 years

I've had limits in excess of my income for about 20 years, often over twice my income. I'm quite tardy in closing old accounts and it doesn't seem to affect applications. In fact I've often thought lenders are reassured by the fact others have given me decent limits and just follow suit. 

While I never stretched to 3 times my income, I also did what you've suggested within the last 6 years and took over £30k in interest free debt to stooze. It was a bit of game playing for me trying to make more on the money than I was paying for it, and I came to the game too late, after the big gains were gone. TSB who were a minor credit card in my collection, with one of the smallest limits, cut my limit, but none of the other lenders blinked. TSB weren't even one of the cards I took money from, as they weren't offering anything at 0%. 

Others experiences may vary - and I was not anticipating a need for any big applications, so I wasn't risking much, but it certainly worked for me. 

Nebulous2

Vidsify said:

Hi. I’ve been informed by my Credit Card Provider that I’m eligible to increase my available limit on the card. I’m in two minds to do it or not as I’m not sure if it affects my credit score taking a large portion of my available total limit. I’ve never gone over my limit now and I’ve always paid in full well before the payment is due. Any advice would be great. Cheers 

Don't overthink it. 

I haven't had any increases for a while, but Nationwide are the only credit card that have written saying I would qualify for an increase, but I had to contact them to accept it. They started me with a smaller limit than others and offered regular increases (every 6 months?)  for a while. I ignored / forgot the last one and they haven't offered again. 

Others just put it up and said to contact them if I didn't want it. 

If all else is well in your life; stable income, stable address, electoral roll, repaying credit on time everytime, able to afford gas / electric, then a credit limit is a relatively unimportant factor for anything. If you are on the edge, struggling, and a credit application is marginal, then the credit limit may have some relevance...... 

martinbainbridge1975

Vidsify said:

Hi. I’ve been informed by my Credit Card Provider that I’m eligible to increase my available limit on the card. I’m in two minds to do it or not as I’m not sure if it affects my credit score taking a large portion of my available total limit. I’ve never gone over my limit now and I’ve always paid in full well before the payment is due. Any advice would be great. Cheers 

I would increase your limit as if anything it will be positive for your score as it reduces your credit utilisation rate on any balances, if you pay in full then it shows you manage credit well