Credit Utilisation vs Total Available Credit

Superhoopza

If the aim is to be able to get a 0% offer or card somewhere to reduce interest, which would have a bigger beneficial impact on working towards that goal? If I was to close a card I have fully paid off and therefore reduce my total available credit to a lower percentage of my income versus increasing my credit utilisation by closing said card? I'm hesitant to use CRA's 'impact factors' so am reaching out for advice here. Is more information needed to better understand possible impacts?

Context:
Carrying balances on various cards and total debt will stay the same regardless of decision made to the above question.

Brie

Any lender will look at how much total credit you have available whether you are using it or not.  And then decide if you can afford all of that if you maxed it out.  So if you want to do 0% offers you either need to be getting those on the cards you already have or close a couple to allow you to get new cards - assuming your income can't support new cards any other way.  

This is why consolidation loans often don't work or trying to get another card with a 0% deal.  The lender has no reason to believe you are going to use the new available credit to clear the old debt.  You could drop it on the dogs or book a cruise down the Nile instead. 

Superhoopza

So total credit available is more important in decision making than utilisation of available credit. Good to know, thank you.

born_again

Credit utilisation is just like the credit score. CRA rubbish. As far as lenders go.

Superhoopza

born_again said:

Credit utilisation is just like the credit score. CRA rubbish. As far as lenders go.

Appreciated, thank you. I'll try and close a card down then and reduce the credit I have available to me in the hope of it leading to 0% offers/cards in a few months.

eskbanker

Superhoopza said:

So total credit available is more important in decision making than utilisation of available credit. Good to know, thank you.

I'm not sure that's always true?  Reducing available credit while carrying balances inherently worsens the utilisation ratio while simultaneously improving the available credit to income one, so I'm not sure it's valid to perceive the latter necessarily outweighing the former - it will come down to wider circumstances and the lender's own policies and algorithms....

Superhoopza

eskbanker said:

Superhoopza said:

So total credit available is more important in decision making than utilisation of available credit. Good to know, thank you.

I'm not sure that's always true?  Reducing available credit while carrying balances inherently worsens the utilisation ratio while simultaneously improving the available credit to income one, so I'm not sure it's valid to perceive the latter necessarily outweighing the former - it will come down to wider circumstances and the lender's own policies and algorithms....

That is why I'm asking the question.

born_again

Superhoopza said:

eskbanker said:

Superhoopza said:

So total credit available is more important in decision making than utilisation of available credit. Good to know, thank you.

I'm not sure that's always true?  Reducing available credit while carrying balances inherently worsens the utilisation ratio while simultaneously improving the available credit to income one, so I'm not sure it's valid to perceive the latter necessarily outweighing the former - it will come down to wider circumstances and the lender's own policies and algorithms....

That is why I'm asking the question.

End of the day. Each lender has it's own criteria & that will change depending on their risk adversity at any given time. Marketing may decide that they need to push CC's to boost sales. So risk adversity will be lowered at that point.

Superhoopza

So are we saying the answer is different depending on the lender and their criteria and therefore we can't give a judgement of whether one is better than the other?

Grumpy_chap

Superhoopza said:

So are we saying the answer is different depending on the lender and their criteria and therefore we can't give a judgement of whether one is better than the other?

Pretty much, yes.
The lenders guard their criteria so we can only second guess how these two elements are factored into the overall decision.

Superhoopza

Grumpy_chap said:

Superhoopza said:

So are we saying the answer is different depending on the lender and their criteria and therefore we can't give a judgement of whether one is better than the other?

Pretty much, yes.
The lenders guard their criteria so we can only second guess how these two elements are factored into the overall decision.

Appreciate the honestly. Some people answer and are c0ck sure with responses and not always correct.