Does it look bad to request lower limits?

CannyJock

clio wrote: »

Canny Jock
I,m only paid £15 K a year so do i qualify for anything or need to do anything special in respect of telling anyone of my tax bracket in respect of stoozing/savings etc??

G/F works and my money stays with me lol

15K means that your interest on savings will be taxed at 20% (unless it's an ISA ) so you're a basic rate tax payer - no need to notify anyone of anything.

As an aside, I put a simple tax calculator together for a client so they could tell their weekly paid workforce whether they'll be better or worse off with the change in the tax rates and bands from 6th April onwards - on a salary of £ 15,000 you'll pay £ 1,882.90 in tax in 07/08 and £ 1,913.00 in tax in 08/09 - £ 30.10 worse off before you take into account inflation and increased cost of living. The basic rate being reduced from 22% to 20% also means that pension contributions will be grossed up by less so you're losing money there too.

If you've not already, have a read at: http://www.moneysavingexpert.com/protect/benefits-check

There's a link to the www.Entitledto.com website - great tool.

Moggles_2

Originally Posted by TheJimster
How can lowering credit limits affect future applications for credit?

Unfortunately, reducing credit limits can affect future credit applications, if you overdo it. Just because some adjustment may, in some circumstances, be a good thing, does not mean that more of the same is even better. Moderation is the key.

Other things being equal, it's better (credit score-wise) to have fewer cards with higher limits, than a clutch of cards with lower limits. So, if you want to reduce your available credit, it's better to cancel a card outright, as Martin advises, than keep lowering the
credit limit

Moggles_2

Originally Posted by itsgototstop
My friend said it made it look as if I was in difficulty financially

This is overstating the case somewhat. Obviously, I don't know how many cards you have in total or their limits, but reducing three down to 10k each is not going to make you look stretched. Perhaps it was your plan to lower all three again that alarmed your friend.

Moggles_2

Originally Posted by skyrider007
I'm thinking the opposite! If you're worse off financially you'd be asking them to increase the limit. Asking them to reduce the limit may even give your bank the impression that you're well off and no longer require to borrow so much money any more.

Unfortunately, the card companies will never know you asked for a decrease voluntarily.

A request for a lower credit limit, leaves no record on your credit file of the higher one. Those subsequently searching your credit report, see a longstanding customer with a comparatively low-limit card.

A low limit on a card held for some years could indicate a high risk customer. If the card's in use and the customer appears to have maxed out on a low-limit card, this may signal over-commitment.

Bear in mind that potential lenders cannot assess the way you handle credit directly. The best indication they have is the payment history and credit limits on your existing cards with other lenders.

To my mind, there's no particular advantage to reducing available credit in this way. Better to cancel a card completely, as Martin advises, than voluntarily reduce the limit each time a debt is paid off.

Cards that are closed down and marked "settled" stay on your file for six years and indicate that you can handle a high credit limit well.