Upping a credit limit purely for credit rating purposes

maybeitsbecause

I currently have a Nationwide credit card, which I got years ago both 1) to boost my credit rating and 2) because at the time, you got reward points. I did shop around recently, but it doesn't look like any of the other credit cards on the market would be particularly useful for me - I pay off my credit card in full each month, I don't travel outside of the UK a lot and Amex is often unwelcome where I shop.

With that in mind, I was considering keeping the one credit card but increasing the limit.

ClearScore recommends I keep my credit limit below 30%.

CreditKarma recommends that I build my credit above £15,000.

Do I really need a limit of over £15,000? Does it actually make a difference? I'm only considering increasing my limit for credit score reasons, not because I need to. As I said, I pay off my debt in full each month.

Also, if I am increasing my limit, what is a standard increase to request?

TIA.

Barkin

maybeitsbecause said:

I'm only considering increasing my limit for credit score reasons

In that case, personally, I wouldn't bother. 

la531983

If Credit Karma told you to jump off a cliff, would you do it?

The only reason these companies tell you to do this and do that is in the vain attempt to try and sell you a credit card or loan.

DullGreyGuy

Hopefully you realise that the credit score that Clearscore and the others show is a made up number not used by any lender but has proven to be a very successful marketing tool for these companies.


Lenders look at your credit history and apply their own rating system to these and as such what one company may love another one may hate. In principle high limits are a bit of a double edged sword, on the one hand it shows other lenders trust you and banks are a little bit like sheep in that respect however it can cause you problems with affordability as lenders have to consider what happens if you go wild and spend big on your cards.


What credit are you wanting to apply for that requires you to look like a better risk?

fatbelly

The only thing that matters on a credit file is that information is accurate. You can ignore 'score' and recommendations.

If your credit limit is enough for how you use your card, then there's no point in asking for a higher one.

maybeitsbecause

Many thanks for the advice - I think I'll leave it then. I appreciate the blunt honesty!

@fatbelly I'm about to sink a lot of my liquid funds into my mortgage, so I thought perhaps upping my credit limit might be a sensible thing to do as a contingency plan for emergencies. However, being realistic... said emergencies are unlikely to occur and my current limit is more than one month's take-home anyway so that should be a decent buffer as is.

fatbelly

If you need a higher limit, say if you get a huge bill for a car repair, then that is the time to phone and ask.

maybeitsbecause

@fatbelly Thanks again. Will do.

CliveOfIndia

As others have said, you can ignore pretty much most of what the CRAs tell you, just make sure that the data contained on your report are factually correct.  And most definitely ignore your score and their assessment of your credit-worthiness - after all, they're not the ones lending you money, are they?

If the limit you've currently got is sufficient for your needs then just leave it as it is.

maybeitsbecause said:

I'm about to sink a lot of my liquid funds into my mortgage, so I thought perhaps upping my credit limit might be a sensible thing to do as a contingency plan for emergencies. However, being realistic... said emergencies are unlikely to occur and my current limit is more than one month's take-home anyway so that should be a decent buffer as is.

The only comment I might make is that you should never plan to buy things on a credit card that you won't be able to clear in full at the end of the month.  Yes, of course unexpected expenses do happen, but ideally you shouldn't bank on using a credit card to pay for them with no way of paying it off.

And arguably, how many expenses are truly unexpected?  Car repairs, boiler goes kaput, something in the house needs repairing/replacing, you need a new washing machine/cooker/whatever ... all these things will happen at some point, you just don't know when.  The prudent approach is to gradually build up a savings pot - and if you can earn some interest on it then so much the better.  When the inevitable bill arrives, by all means use a credit card to pay for it (especially if you can earn rewards of some kind), but then use your "emergency fund" to clear the card when the statement arrives.

For that reason it could be a good idea to make sure you've a sufficient credit limit to be able to pay for these infrequent events, but there's certainly nothing to be gained by having a high limit "just for the sake of it".

Even then, if you've got the money saved up anyway, you don't actually need to use a credit card, though there can be some advantages to it.

maybeitsbecause said:

I currently have a Nationwide credit card, which I got years ago ... to boost my credit rating

I pay off my credit card in full each month

Bottom line - if you're purely concerned about maintaining a good credit history (which is what actually matters, and is what a lender will be looking at) then you're doing exactly the right thing, there's no actual need to change anything.

Kim_13

Credit Karma tell me to increase my credit above £4,000 - presumably if one reaches that number, they just tell you to increase to a higher one.

400ixl

The CRA's are looking to upsell products to people, simple as that. Its part of their business model. No one see's the fictitious score they give you in the UK system, as long as the actual history is accurate that is all you really need to be concerned with. The rest is down to what you need for your circumstance.