Credit limit explanation?

wmat983

When you check credit file and says you are using over 50% of your credit limit is this just for credit cards where you have an "available balance" or do loans etc count towards it also even though you don't have an "available balance" once made payments.

If I had a loan and a credit card and was using 75% of credit card balance but only had 25% left of loan to pay off would you be using 50% of credit limit or does the loan not count as the 75% already paid is not an available balance?

sourcrates

Ignore the gumph credit reference agencies spew out, its mostly meaningless twaddle.

CliveOfIndia

Sourcrates is absolutely correct, you can safely ignore pretty much 99% of what the reference agencies tell you.

To answer your specific question, it's your available credit card credit that they're referring to.  But as long as you're always paying your cards in full every month, it matters not one job how much of the available credit you're using.

The only time that lenders might start to get concerned about it is if you're not repaying in full (with the exception of 0% promotional deals).  And even then, the percentage utilisation, in itself, is less of an issue than the fact that you're not clearing the balance each month.  Plus, of course, not paying in full will be costing you a fair amount in interest payments.

wmat983

Thank you for your replies! 

Nasqueron

The utilisation thing is a double edged sword - having a lot of balance suggests a problem with debt, having a lot of available credit shows the opposite but that you could run up a load of credit!