Credit limits and over drafts

mcplumb

I will be making a mortgage application in early 2025 and my current available credit and overdrafts are as below. Will trimming these back be of benefit and is there any reason not to amend limits prior to mortgage applications ? My utilisation of credit is minimal, although I do occasionally make large purchases via CC for s75 protection. 

Current account OD - £2000, not utilised for at least 10 years

3 x s sub £300 OD's with other current accounts, not used but there as a buffer for payment errors /delays.

CC1 - £10,750 - used occasionally with balance paid in full 

CC1 - £10,000 - used regularly with balance paid in full     

Emmia

I'd cut that £2k overdraft facility you're not using to £0.

Brie

Emmia said:

I'd cut that £2k overdraft facility you're not using to £0.

Or at least down to just a couple hundred in case of errors?

Do you regularly spend over £10k a month on your credit cards?  That seems like a lot to me but perhaps there's a very good reason to do so.  But great that you're paying in full.

Are there any other ways you are using credit?  Monthly payments of home or motor insurance?  Phone contracts?

And of course all of this is relative to income.  What you have mentioned is nothing if your income is £300k but a bit of an issue if it's £30k.  

How early in 2025 is the application?  If it's before the end of Feb it's not likely to make any difference if you make any changes due to reporting cycles.  But if it's maybe June then changes should be easily be seen by then.  

Meanwhile have you checked your credit report (not your score)?  Any CCJs lurking?  Are you registered to vote?

mcplumb

I have very little in the way of monthly commitments and use little of the available CC limits.

The spending has been largely for hone improvement works with balance paid in full. The highest monthly balance has been 6k so just over half of the available credit on one card, nil on the other.

It's whether to reduce both or just one limit. Ideally I'd like to keep 2 cards as it adds flexibility for future work at home.

The OD could be down to £500 just as a buffer if required 

Emmia

mcplumb said:

I have very little in the way of monthly commitments and use little of the available CC limits.

The spending has been largely for hone improvement works with balance paid in full. The highest monthly balance has been 6k so just over half of the available credit on one card, nil on the other.

It's whether to reduce both or just one limit. Ideally I'd like to keep 2 cards as it adds flexibility for future work at home.

The OD could be down to £500 just as a buffer if required 

But you have 3 other accounts with smaller OD facilities - so do you actually need another "buffer"?

mcplumb

Direct debits spread across various accounts, so I am more comfortable with od in place to cover each account.

Many years ago I had an incoming payment rejected/recalled. The knock on affect caused far too much hassle and charges

Nebulous2

Are you using a mortgage broker?

They would be the person to ask. In general it isn't a good idea making changes to your credit immediately before a mortgage application. 

dumpster_fire2025

Mortgage providers generally don't care about unused credit limits, they're far more interested in what you are using, and how it's being paid back.

As the ODs are not being used they're not important, but I'd avoid reducing them as it may raise questions with the lender as to why.

As the CCs are being paid in full, they won't be an issue unless the level of spending on them was problematic.