Does credit utilisation matter if cards are always paid in full each month?

homepurchase

I have several credit cards that I have always paid off in full every month (the statement balance) but generally, due to the limit on my cards being so low for the way I live, I am usually high for my credit utilisation. I have found very mixed information about if utilisation matters if you pay in full so I thought I would gauge the opinion of people here.

Another thing related is that I know having a high amount of credit taken out elsewhere will effect trying to take out any other credit in the near future but I do not plan on taking out anything other than possibly a cashback credit card in ~6 months. Will high utilisation a few months prior to application despite low utilisation in the month or two coming up to the application negatively affect the chances of acceptance?

DullGreyGuy

Each lender creates is own risk assessment tools to decide who they want to lend to and how much. These are corporate intellectual property and not publicly shared. As a consequence anything you read about scoring has to be considered against the fact that each firm is different and most commentators are basing it on limited knowledge and often anecdotal evidence. 

Most believe that if you are paying off the cards in full each and every month that future lenders won't care what the utilisation rate is but that isn't to say it's a universal truth. 

Nasqueron

The utilisation figure is only relevant if you have a lot of debt not being cleared, particularly if it means you are paying interest. While balance transfer cards are usually marked with the promo rate flag, the existence of the debt can still be a reason for a lower limit or even a decline. The CRAs will tell you it's the end of the world, but if you have a solid history of spending and paying in full on time, there is no issue.

Credit scoring by the lenders (not the fake figure you see on sites like Experian) is generally understood but the specifics are all protected by lenders to stop people trying to game the system. If you have years of green ticks of borrowing and paying in full, on time, there is little reason for a decline if you meet their other criteria.

tomxlisa

That’s what I normally see a lot of when I apply for credit that I haven’t reached the lenders scoring figure, I hold balances on credit cards but mainly as they are mostly 0% or I don’t mind paying the little interest if it works for me, would having high balances affect my chances of future credit and higher credit limits, I’m guessing so?.

lr1277

I suspect it depends on whether your salary/income can support your 'new' total card limits irrespective of how much debt you have on each of your current cards.

I base this on the fact I am not working so have very little income. In this state, I asked my old card provider to increase my modest limit and told them how I was going to pay it off. They agreed. Then this old card provider closed down. I tried to get a replacement card and was declined, I suspect because of my minimal income. This is all while my CRA credit score was 990+.

tomxlisa

My income isn’t great so would I be better off closing down some accounts if I want to open new ones with better perks, what’s the best way to get a decent limit on just one card would this also be to close down accounts, as currently I’ve got a generous limit but spread across several cards, ideally I’d like to have one card with a good limit on it, then maybe another just as a backup instead of lots of different cards. 

Nasqueron

lr1277 said:

I suspect it depends on whether your salary/income can support your 'new' total card limits irrespective of how much debt you have on each of your current cards.

I base this on the fact I am not working so have very little income. In this state, I asked my old card provider to increase my modest limit and told them how I was going to pay it off. They agreed. Then this old card provider closed down. I tried to get a replacement card and was declined, I suspect because of my minimal income. This is all while my CRA credit score was 990+.

It's a bit of this, bit of that, I have had a couple of limit increases on cards this year, not told them of any chance of income (pay is higher but they don't know that), my utilisation is going down because of that though went up as I closed a card that I wasn't using and had no offers on. As long as you have a good history with them they tend to put limits up over time. The CRA score had no impact on the application.