Salary - Credit Limit ratio

Grumpy_chap

lhwrandal said:

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Don't risk taking what has been said out of context and then "corrective" action that makes things worse.
It is not inherently bad to manage your debts so that there is never an outstanding balance. 
It is just any prospective lender will look at your available credit (£120k) and your request for further credit and may conclude that your intention is to splurge the whole lot (current available credit plus the additional credit) on whatever you might splurge that amount of money.  It would not be unreasonable for a prospective lender to conclude you are only applying for the additional credit because you need it.

Nasqueron

lhwrandal said:

Nasqueron said:

When you say you pay off CC spend straight away, do you mean before the credit card statement is made or after? If the former, it makes it look like the card is never used which will affect how lenders see you when they do a credit check (based on the data, not the fake score) - having lots of credit and looking like you are never using it is not good for building a good credit history

That said, with so much credit available vs salary, (any other debts also e.g. PCP, mortgage etc?) it can look bad to lenders

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Basically that gives information to any lender (other than the card issuer) that you are not using the card at all and thus have 120k of unused credit which looks bad to another lender as you could run up unaffordable debts quickly should you wish to.

Spend as normal on the card but set a direct debit to take payment in full every month after the statement and it'll show the card is managed well which will make you look better to other lenders

MEM62

sammyjammy said:

If you have £120k of mainly unused credit why would you want to apply for more?  

lhwrandal said:

Have a general question on salary vs total credit limit.  My annual salary is approx. £86K with a total credit card limit of £120k across my 5 credit cards.  My utilisation is low as I usually cleared the balance right away.  No issue with my credit score but new card applications were declined most of the time lately (trying to get new cards for perks). 

.......... 

[Deleted User]

Nasqueron said:

lhwrandal said:

Nasqueron said:

When you say you pay off CC spend straight away, do you mean before the credit card statement is made or after? If the former, it makes it look like the card is never used which will affect how lenders see you when they do a credit check (based on the data, not the fake score) - having lots of credit and looking like you are never using it is not good for building a good credit history

That said, with so much credit available vs salary, (any other debts also e.g. PCP, mortgage etc?) it can look bad to lenders

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Basically that gives information to any lender (other than the card issuer) that you are not using the card at all and thus have 120k of unused credit which looks bad to another lender as you could run up unaffordable debts quickly should you wish to.

Spend as normal on the card but set a direct debit to take payment in full every month after the statement and it'll show the card is managed well which will make you look better to other lenders

No it doesn't look like that as CRA will still capture the value of transactions, cash advances, payments etc each month regardless. The card will also be listed as active and in good order by the card issuer.

Any card issuer could deem you unprofitable by being a credit risk or by always paying off your cards every month.

MrFrugalFever

[Deleted User] said:

Nasqueron said:

lhwrandal said:

Nasqueron said:

When you say you pay off CC spend straight away, do you mean before the credit card statement is made or after? If the former, it makes it look like the card is never used which will affect how lenders see you when they do a credit check (based on the data, not the fake score) - having lots of credit and looking like you are never using it is not good for building a good credit history

That said, with so much credit available vs salary, (any other debts also e.g. PCP, mortgage etc?) it can look bad to lenders

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Basically that gives information to any lender (other than the card issuer) that you are not using the card at all and thus have 120k of unused credit which looks bad to another lender as you could run up unaffordable debts quickly should you wish to.

Spend as normal on the card but set a direct debit to take payment in full every month after the statement and it'll show the card is managed well which will make you look better to other lenders

No it doesn't look like that as CRA will still capture the value of transactions, cash advances, payments etc each month regardless. The card will also be listed as active and in good order by the card issuer.

Any card issuer could deem you unprofitable by being a credit risk or by always paying off your cards every month.

The CRA's will only receive the reported statemented amount and any payments made during that period towards the card so for example;

Statement amount £0 (because paid off prior to generated statement)
Payments towards account £500 (payments made since last statement date up to and including next statement generated date).

They will then report the status of the account - such as active, in arrears, arrangement to pay, defaulted etc.

If a lender was to review this manually then the underwriter could extrapolate the data and assume that from payments made to the account during the statemented period would indeed have been the statemented amount and thus the consumer is using the credit card accordingly.

I am uncertain if an automated-algorithm decision would be intelligent enough to pick this up.

[Deleted User]

MrFrugalFever said:

[Deleted User] said:

Nasqueron said:

lhwrandal said:

Nasqueron said:

When you say you pay off CC spend straight away, do you mean before the credit card statement is made or after? If the former, it makes it look like the card is never used which will affect how lenders see you when they do a credit check (based on the data, not the fake score) - having lots of credit and looking like you are never using it is not good for building a good credit history

That said, with so much credit available vs salary, (any other debts also e.g. PCP, mortgage etc?) it can look bad to lenders

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Basically that gives information to any lender (other than the card issuer) that you are not using the card at all and thus have 120k of unused credit which looks bad to another lender as you could run up unaffordable debts quickly should you wish to.

Spend as normal on the card but set a direct debit to take payment in full every month after the statement and it'll show the card is managed well which will make you look better to other lenders

No it doesn't look like that as CRA will still capture the value of transactions, cash advances, payments etc each month regardless. The card will also be listed as active and in good order by the card issuer.

Any card issuer could deem you unprofitable by being a credit risk or by always paying off your cards every month.

The CRA's will only receive the reported statemented amount and any payments made during that period towards the card so for example;

Statement amount £0 (because paid off prior to generated statement)
Payments towards account £500 (payments made since last statement date up to and including next statement generated date).

They will then report the status of the account - such as active, in arrears, arrangement to pay, defaulted etc.

If a lender was to review this manually then the underwriter could extrapolate the data and assume that from payments made to the account during the statemented period would indeed have been the statemented amount and thus the consumer is using the credit card accordingly.

I am uncertain if an automated-algorithm decision would be intelligent enough to pick this up.

The CRAs must have made a special data sharing arrangement for me as my files showed all the info I mentioned...

MrFrugalFever

FredTrump:

The CRAs must have made a special data sharing arrangement for me as my files showed all the info I mentioned...

Sorry, where on this (my) Equifax Statutory Credit Report does it give the detail you are suggesting that I hadn't outlined in my previous post?

Nasqueron

[Deleted User] said:

Nasqueron said:

lhwrandal said:

Nasqueron said:

When you say you pay off CC spend straight away, do you mean before the credit card statement is made or after? If the former, it makes it look like the card is never used which will affect how lenders see you when they do a credit check (based on the data, not the fake score) - having lots of credit and looking like you are never using it is not good for building a good credit history

That said, with so much credit available vs salary, (any other debts also e.g. PCP, mortgage etc?) it can look bad to lenders

Yes, in fact I do pay off before the statement is generated…so my credit report shows zero balance most of the time.  I do not have other outstanding debts.  Didn’t know it can look bad for lenders.

Basically that gives information to any lender (other than the card issuer) that you are not using the card at all and thus have 120k of unused credit which looks bad to another lender as you could run up unaffordable debts quickly should you wish to.

Spend as normal on the card but set a direct debit to take payment in full every month after the statement and it'll show the card is managed well which will make you look better to other lenders

No it doesn't look like that as CRA will still capture the value of transactions, cash advances, payments etc each month regardless. The card will also be listed as active and in good order by the card issuer.

Any card issuer could deem you unprofitable by being a credit risk or by always paying off your cards every month.

Credit card companies report the statement balance to the CRAs monthly (or less often it seems on the free end), the statement balance is always £0 because the OP has paid off the balance before the statement hence it looks like the card is not used. CRAs don't get real time updates of spend, they just get an update from the card issuer - in this case showing 0 balance hence card not in use. There is no reason to pay it off before the statement is produced