Thoughts on credit levels and credit utilisation

Sabbath84

Hey all 
Just wondering if there is a group consensus on 
1. If the CC companies care about utilisation levels ? When offering new credit.
2. If so, is it worth opening up some new cards (not caring about special offers or spending on them) in order to lower the utilisation levels?.
3. Would you then run into the problem of the offers we want drying up because they see you as a risk having a greater level of potential debt ?.

Hope that makes sense. Just looking at my options and strategies moving forward. Trying to work out the best way to do things or not to do things.

Emmia

Are you carrying a balance on your cards?

Personally I'd focus on ensuring my credit card bill is cleared in full every month (saving money on interest) rather than what my overall utilisation looks like. 

Credit card companies care about utilisation as they a) want to ensure they will be paid back, b)the money on cc limits has to be held by them incase all their customers go on wild spending sprees at once (having customers with low utilisation, is ok until they decide to fully utilise) and c) they don't want to be accused of irresponsible lending.

vacheron

In my experience CC companies are concerned about high levels of credit utilisation until either:

1. They see evidence of years of credit history with no missed payments or defaults.
2. Their particular organisation has decided they need to lend more money.

I have found that it is the lenders opinion on your total available credit that affects new card offers, not utilisation. 

I run multiple 0% cards at once (usually 5-8 on average). When I am fully maxed out, I can't get anything other than sub-prime credit builder cards with low limits, which I never apply for.

When one or two of my "prime" cards reach the end of their intererst free period I pay these off in full if no additional prime Balance Transfer offers are available.

I will then generally find that a few months later I am getting prime card offers again. However at this point although my total credit limit is lower, but my utilisation is actually higher because I have paid off the cards which had the lowest utilisation as they had been reciving their monthly minimum payments for longer.

Based on the above I feel that they are more averse to potential debt as you mentioned. i.e. "What if this person applies for loads of cards, maxes them all out and then either struggles to repay or just flees the country or something".

Based on this I would avoid the option of applying for new cards just to sit on them. Keep your total credit limit in reserve for a card that would actually be useful to you. 

Sabbath84

Much appreciated vacheron. 
Is good to get others people's thoughts and experience. Only been stoozing since October so still figuring out the nitty gritty of things.

Nasqueron

Emmia said:

Are you carrying a balance on your cards?

Personally I'd focus on ensuring my credit card bill is cleared in full every month (saving money on interest) rather than what my overall utilisation looks like. 

Credit card companies care about utilisation as they a) want to ensure they will be paid back, b)the money on cc limits has to be held by them incase all their customers go on wild spending sprees at once (having customers with low utilisation, is ok until they decide to fully utilise) and c) they don't want to be accused of irresponsible lending.

Utilisation is definitely an issue for people carrying normal balances but if you have a balance transfer card instead of a normal spending one and the balance is marked as a promo rate it's not really an issue for an otherwise well managed file. I have about £13k over a few cards , I always have high utilisation on one card (the new BT one) while others have various offers, I've not had any real issues continuing to get cards or offers. 

Nebulous2

I think debt levels are more important than credit limits or utilisation. I've had credit limits well over my income for at least 20 years. At times I've been well over 2 times income. I've never had a problem getting more offers. 

Once the debt I'm carrying goes over 50% of my income offers slow down, and as it approaches my income, they will dry up completely. 

DullGreyGuy

Sabbath84 said:

Hey all 
Just wondering if there is a group consensus on 
1. If the CC companies care about utilisation levels ? When offering new credit.
2. If so, is it worth opening up some new cards (not caring about special offers or spending on them) in order to lower the utilisation levels?.
3. Would you then run into the problem of the offers we want drying up because they see you as a risk having a greater level of potential debt ?.

Hope that makes sense. Just looking at my options and strategies moving forward. Trying to work out the best way to do things or not to do things.

Each lender has its own rules and so there is no single consensus amongst them for visitors here to also agree on. For example AmEx used to dislike carried balances on people applying for a ChargeCard (dont know their views since moving almost everything to credit cards). 

Some lenders may look at you across all products held, some may look at individual cards and so your idea of increasing available funds by getting new cards wouldnt work for them. 

Some lenders are more interested in seeing you have 2-3 cards with £15k limits than 10-15 cards with £5k limits even if the total available credit is the same. 

Your total limit is always going to be compared to your disposable income so driving down utilisation via increased credit may move the sale in one direction but could be offset by the limit betting to high against your income 

These are fairly complex algorithms that companies use that are corporate IP and protected. Third party "checkers" get it to wrong with significant resources to try and work out the algorithms and so random people online who have much less experience or resources are unlikely to be better at guessing the logic.

MrFrugalFever

Emmia said:

Are you carrying a balance on your cards?

Personally I'd focus on ensuring my credit card bill is cleared in full every month (saving money on interest) rather than what my overall utilisation looks like. 

Credit card companies care about utilisation as they a) want to ensure they will be paid back, b)the money on cc limits has to be held by them incase all their customers go on wild spending sprees at once (having customers with low utilisation, is ok until they decide to fully utilise) and c) they don't want to be accused of irresponsible lending.

You do realise this is a Stoozing thread and as such the purpose of stoozing is to carry a balance on a 0% credit card and NOT pay off in full each month.

With regards to the OP's questions regarding utilisation, it would appear that lenders have massively ramped up their lending criteria with regards to lending practices under reformed regulatory changes (such as the persistent debt reminders etc) and as such I think stoozing will become generally harder even for the most credit worthy consumer. The 'promo' flag definitely helps with underwriting decisions from my experience.

I have £7,000 stoozed on a 0% Santander CC with a credit limit of £7,500. I get notifications periodically about my utilisation being high and as such this has 'lowered' my fictitious credit score, however, I also frequently get offers of £25k + pre-approved loans and further pre-approved credit cards with £10k + limits. 

There is no denying that eventually you will not look attractive to a lender and your credit worthiness will dry up leaving you with no choice but to settle the CC's and potentially close some accounts, you'd then need to wait a good few months for the fallout (this would send the credit agencies in to a frenzy) and then attempt to start again with small numbers.....

Nasqueron

MrFrugalFever said:

Emmia said:

Are you carrying a balance on your cards?

Personally I'd focus on ensuring my credit card bill is cleared in full every month (saving money on interest) rather than what my overall utilisation looks like. 

Credit card companies care about utilisation as they a) want to ensure they will be paid back, b)the money on cc limits has to be held by them incase all their customers go on wild spending sprees at once (having customers with low utilisation, is ok until they decide to fully utilise) and c) they don't want to be accused of irresponsible lending.

You do realise this is a Stoozing thread and as such the purpose of stoozing is to carry a balance on a 0% credit card and NOT pay off in full each month.

With regards to the OP's questions regarding utilisation, it would appear that lenders have massively ramped up their lending criteria with regards to lending practices under reformed regulatory changes (such as the persistent debt reminders etc) and as such I think stoozing will become generally harder even for the most credit worthy consumer. The 'promo' flag definitely helps with underwriting decisions from my experience.

I have £7,000 stoozed on a 0% Santander CC with a credit limit of £7,500. I get notifications periodically about my utilisation being high and as such this has 'lowered' my fictitious credit score, however, I also frequently get offers of £25k + pre-approved loans and further pre-approved credit cards with £10k + limits. 

There is no denying that eventually you will not look attractive to a lender and your credit worthiness will dry up leaving you with no choice but to settle the CC's and potentially close some accounts, you'd then need to wait a good few months for the fallout (this would send the credit agencies in to a frenzy) and then attempt to start again with small numbers.....

I got one from them doing the final BT onto my Santander card as it is about .1% below the 95% cap warning to pay before I spend anything in case I go over the limit. I closed my old Santander BT card a little while back and got a new one with bigger limit. I will likely close the NatWest and Tesco ones as they clear and keep Barclays, HSBC and Santander running for the moment and pay a load down. NatWest may be useful to start again with but I guess Tesco becoming part of Barclays will mean that option will disappear.