Balances

tomxlisa

Do balances on credit cards or any credit you have on your report affect ability to get future credit or does it not matter as long as your paying the minimum payments and sticking to the terms, I know it costs more etc with interest but purely want to know if it affects a lenders decision, I mean if all the balances was cleared and say you had 7K available for example in credit would that affect a lenders decision cause they could be like you don’t need more credit as you have 7K available, so what’s the best thing here, having no balances or having a balance makes no difference to if it was cleared, how do lenders look at this?. 

Gandalf644

tomxlisa said:

Do balances on credit cards or any credit you have on your report affect ability to get future credit or does it not matter as long as your paying the minimum payments and sticking to the terms, I know it costs more etc with interest but purely want to know if it affects a lenders decision, I mean if all the balances was cleared and say you had 7K available for example in credit would that affect a lenders decision cause they could be like you don’t need more credit as you have 7K available, so what’s the best thing here, having no balances or having a balance makes no difference to if it was cleared, how do lenders look at this?. 

If applying for more credit, most credit card companies/banks will ideally want to see a history of the balance of a card paid off in full every month (unless on an offer- ie 0% over 12 months when the full balance ideally should be paid off by the end of the offer period). ‘Maxed out’ credit cards/overdrafts over a long period do look bad.  

What is also important is not missing monthly payments or making payments late.

Also avoid only paying the minimum monthly payments (unless on a special offer period). It may indicate one is struggling to pay off the card and/or could eventually be put one into ‘persistent debt’ measures.

Missing/late payments or only paying minimum payments may act as a red flag to other potential lenders.

Potential lenders will also look at income, affordability and the amount of credit currently used, as well as currently available credit in making a lending decision (they each have their own algorithms to work this out).

Overall, UK banks are mandated by the FCA to lend responsibly. Having a large balance on a credit card and only paying the minimum over a long period may indicate potential problems and put off other lenders.

Jami74

When I was carrying high balances and paying minimum (on promotional offers) I got turned down for more credit. Once I'd paid them all off, banks started offering me new deals despite me having access to credit. So in my experience, having no or very little debt made it easier to get new credit despite high credit availability.

martinbainbridge1975

as above pay more than the minimum, look at existing cards see if there are 0% offers for existing customers to allow debt shifting if you are concerned about being declined for a new card.

from my own experience it appears easier now than the end of last year to get accepted for cards, like jami74 above i'm getting plenty of offers despite having a decent chunk of credit available 

tomxlisa

Thanks for the replies, I think what (Jami74) said was kinda what I was looking for as that’s what I wanted to know sort of the benefits of high balances vs high available credit and if one is better than the other or the same, given these answer I may try to clear down some balances cause despite me not missing any payments for years I don’t seem to be accepted or offered new deals too often, maybe this could be down to affordability though or recent hard searches but it seems having low or no balances at all definitely helps from the replies I’ve had. 

enthusiasticsaver

If your debt is  not coming down that will affect credit applications.  As others have said most credit card companies want to see well run credit card accounts which means more than minimums and ideally paid off in full. If you have been paying these debts for years surely the interest is very high?  

tomxlisa

Like I said in my first post I know all about interest and what it costs etc don’t really want to get into that as that wasn’t what I was asking but the debt hasn’t been there for years and I certainly do pay much more than the minimum, but yes I’ve got my answer here now so thanks for the replies, was what I thought but wanted some other opinions on the matter.