Are MBNA playing with my credit rating?

Hoenir

GoneDiving said:

"Credit reference agencies look at ‘utilisation’, which is best described as the proportion of available credit that you’re currently using. For example, if you had two credit cards with £10,000 limits, both with a balance of £7,500, your utilisation would be 75%. Though there are several opinions on the matter, 30% utilisation is often seen as a good level for your credit score."

More importantly are factors such as what %  the £15k of debt represents of your annual income. Likewise the speed with which you've been repaying the debt. Or do you have a history of moving debt around and over time it's incrementally heading upwards. 

GoneDiving

MorningcoffeeIV said:

You're mixing up the pretend score with how lenders assess you for risk.

While utilisation is a factor, it's far less on a declining promotional balance.

Your MBNA anecdote is also entirely made up.  Payments will go to the highest rate balance, so the 0% balance couldn't be settled before the interest bearing balance.

But as I say, it's standard conspiracy nonsense.

I went into my account to double check.

They offered me an additional 0% balance transfer but the period would end 9 months before the original deal ended. Payments, because both rates of interest would be the same, would go towards the oldest balance only. So effectively creating a position designed to secure some interest payments. That's not a conspiracy, that's their job.

An excerpt from the letter I found in the account:

"Will having my credit limit reduced affect my credit score? 

It may. Lenders take a wide range of information into account when making decisions on borrowing, and this includes details about how you've managed your account, and how much available credit you've used."

That's their words not mine - no conspiracy, they know what their doing.

MrFrugalFever

GoneDiving said:

MorningcoffeeIV said:

You're mixing up the pretend score with how lenders assess you for risk.

While utilisation is a factor, it's far less on a declining promotional balance.

Your MBNA anecdote is also entirely made up.  Payments will go to the highest rate balance, so the 0% balance couldn't be settled before the interest bearing balance.

But as I say, it's standard conspiracy nonsense.

I went into my account to double check.

They offered me an additional 0% balance transfer but the period would end 9 months before the original deal ended. Payments, because both rates of interest would be the same, would go towards the oldest balance only. So effectively creating a position designed to secure some interest payments. That's not a conspiracy, that's their job.

An excerpt from the letter I found in the account:

"Will having my credit limit reduced affect my credit score? 

It may. Lenders take a wide range of information into account when making decisions on borrowing, and this includes details about how you've managed your account, and how much available credit you've used."

That's their words not mine - no conspiracy, they know what their doing.

If the old balance was 0% and the new proposed balance on top is going to be 0% then its logical that MBNA would allocate payments made to the account to the oldest bearing debt. If the old balance reverted to say 27.9% and a new 0% balance was introduced then MBNA would allocate payments to your 27.9%apr bearing debt FIRST before the 0%. This can be checked and clarified in your monthly statements under interest charges.

A credit limit reduced with a much higher credit utilisation % will indeed affect your 'score' with the credit brokers, whom by the way NEVER lend you any money.

It may or may not affect your chances of obtaining future credit/best apr's etc depending on the lenders own INTERNAL algorithmic scoring system. Some lenders will take a lesser view of high credit utilisation than others.

fergie_

There can be numerous reasons why your limit is reduced. Periodically, responsible lenders do reviews.

 It could be to reduce their exposure, they don't think you need it or they could have decided you aren't profitable to them.