How close can I get to my credit limit? 7 November 2022 at 3:40PM in Credit file & ratings 9 replies 343 views

propertyhunter

Hello,
I have a credit limit of £2,750.00 on one card, and it has a balance of £1,192 so there is £1,558 available. Am I ok to spend £1,100 without it affecting my credit worthiness? There would be £458 available and the credit card is paid off in full every month. I would not make any further purchases this billing cycle.
Thanks

[Deleted User]

The credit card being paid off in full every month means the amount on the card is irrelevant, there is no credit "worthiness" - your account being cleared monthly shows you are a good borrower. Credit balances are the only thing to worry about - where a card is not paid off in full every month and even then with something like a BT promotional rate it's of limited impact 

DullGreyGuy

Each lender has its own criteria and so what one loves another may hate, though obviously its normally more subtell than that. If you are paying off in full each month then most are unlikely to care how close you get as long as you dont go over

MalMonroe

Lenders, including credit card companies, don't look favourably on those who borrow to the limit. And if you check your credit reports, most credit reference agencies will warn you if it appears that you are using too much of your available credit.

There was the 30% rule - that is, don't use more than 30% of your available credit, in order that you can show that you are not credit hungry. Not sure if that's still a thing.

However, it doesn't matter as you are paying off your balance in full every month and intend to continue to do so, it probably won't impact your credit report. You are showing any prospective lenders that you are in control of your finances. All good!

cymruchris

You might get some 'dire warnings' coming through the likes of credit karma that your utilisation is out of control - but as you're paying in full each and every month, it's not something to be worried about. I'm not sure why they aren't able to look at your payment pattern to see you've been paying off in full before spurting out their dire warnings, but then they also make up imaginary credit scores too.. 

molerat

^^^^ This.  I get that every time I go over 30% use on a card even though I am at around 5% of my total credit availability.  I also get messages that I have increased / decreased my credit card debt even though all my cards are paid off in full each month.

propertyhunter

Thanks everyone - good to know that it should not have any effect on my credit score to make the purchase. Really appreciate it. 

cymruchris

propertyhunter said:

Thanks everyone - good to know that it should not have any effect on my credit score to make the purchase. Really appreciate it. 

The score might go down - it might go up - but don't worry about it. Only you see it. It's your history that's most important. 

[Deleted User]

MalMonroe said:

Lenders, including credit card companies, don't look favourably on those who borrow to the limit. And if you check your credit reports, most credit reference agencies will warn you if it appears that you are using too much of your available credit.

There was the 30% rule - that is, don't use more than 30% of your available credit, in order that you can show that you are not credit hungry. Not sure if that's still a thing.

However, it doesn't matter as you are paying off your balance in full every month and intend to continue to do so, it probably won't impact your credit report. You are showing any prospective lenders that you are in control of your finances. All good!

Point 1 - With the OP scenario - if you use your card even to 99.9% of the limit and pay it off in full every month, all other lenders see is an ocean of green ticks of paid in full = look 100% favourably on you

Point 2 - there is no 30% rule. At all. This is another credit score gimmick, it isn't a thing because it never was a thing. I have more than 50% of my available credit on 0% balances, all 3 of my BT cards are currently only 50%. It has not stopped me getting new cards when I want them. A solid record of paying off on time is all that matters

Point 3 - that contradicts your first point!

phillw

Any credit you apply for after the statement has been generated, and before you pay it off, will see you have more outstanding debt. This may change their lending decision.

Unless you're going through a mortgage application and have already told them how much you owe and you're about to load up with more debt shortly before completion, then I wouldn't worry about it.

Mortgage lenders can (and do) perform a last minute check of your credit file to make sure your situation hasn't changed.