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Credit Utilisation vs Total Available Credit

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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.

Comments

  • Brie
    Brie Posts: 14,616 Ambassador
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    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. 
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  • So total credit available is more important in decision making than utilisation of available credit. Good to know, thank you.
  • born_again
    born_again Posts: 20,320 Forumite
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    Credit utilisation is just like the credit score. CRA rubbish. As far as lenders go.
    Life in the slow lane
  • 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
    eskbanker Posts: 36,989 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 17 February 2024 at 1:10PM
    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....
  • eskbanker 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
    born_again Posts: 20,320 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    eskbanker 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.
    Life in the slow lane
  • 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
    Grumpy_chap Posts: 18,226 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    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.
  • 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.
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