Does reducing credit limit increase your credit rating?

The_Boss

I'm applying for a mortgage and found out through Experian that my credit rating is 'poor'. This despite never having missed or made a late payment and from paying off in full around £2-3k per month over the past few years. The other day, I added up my total credit limit on my cards and found it was around £22000. I have since called them up and got my limits reduced by a total of around £13k. Will this help my rating and therefore my application?

martinpike

It certainly can't do any harm, although if you're paying off £2-3k per month, it sounds like a drop in the ocean to me.

There's something else to this. Ask Experian?

The_Boss

Well, to clear it up - I have my own debts of about £4k on credit cards that isnt paid off each month and a £5k car loan over the next 3 years. But I have paid back in full about £2-3k of work expenses every month for the past few years and dont get why I am not being given any credit (excuse the pun) for this on my rating

martinpike

I agree, it doesn't make sense. On the face of it you should have a perfectly healthy credit record.

Anyone else got any ideas?

Reaper

The size of your repayments is not recorded, nor is it recorded whether you pay off the minimum or the total balance, so you are not getting any benefit from doing these.

So, for example, if you were paying off £3k a month on one card but often forgeting to pay a tiny minimum balance on another card you would end up with a very poor rating.

What is causing your poor score can only be found by you reading up on credit scoring (click on the link in the blue box above) and comparing it to your credit report.

The unused £22k of credit cards would count against you as they total them up and compare it to your income. Note it will take some time for the changes you have made to filter back to the CRAs. Other factors include whether you are on the electoral role, whether you have an CCJ against you, how long you have lived at your current address, how long you have been at your current job etc. Have a read and see what applies to you.

The_Boss

Thanks. I looked at all that on the Experian report when I got my credit score. I am classed as 'poor' and as I'm going through mortgage applications at the moment, I need to boost my score. I have no CCJs, have had the job for 7 years, have lived at home since birth (26 years). Thats why I have tried reducing my available credit to see if it boosts me

I think the problem could also lie with 2 credit card applications and a current account application in the space of 10 days back in June - I was turned down for one of those cards. So we shall see. I'm paranoid about lots of mortgage credit checks being done as I fear that they will also affect my rating

The_Boss

Just another quick question rather than starting a new thread.......

My Natwest Credit card does not appear on my record. I settled it a few months ago, but no record of it is there. I had it since 1998 and made every payment on time. My Egg card started in 2001 and appears on the report with 'settled' next to it, but not the Natwest one

Would Natwest have removed this information from my record? I get the feeling I should call them and ask

jimmyjim_uk

It could be on your credit file held by Equifax.

The_Boss

Interesting. I shall ask Natwest who they use

jimmyjim_uk

Yeah, that might help. Acquiring a copy of your Equifax credit report might give some insight of why your credit score is low. When I get my Credit reports, I always get copies from both CRAs.

denys

The_Boss wrote:

I'm applying for a mortgage and found out through Experian that my credit rating is 'poor'. This despite never having missed or made a late payment and from paying off in full around £2-3k per month over the past few years. The other day, I added up my total credit limit on my cards and found it was around £22000. I have since called them up and got my limits reduced by a total of around £13k. Will this help my rating and therefore my application?

No. May actually damage it depending on level of your income and current commitments.

The_Boss wrote:

Interesting. I shall ask Natwest who they use

NatWest uses Equifax. Your settled cc account should be displayed there. NatWest Home Loan, however, uses both Experian and Equifax in some (most, for 1st time buyers) circumstances.

Having record as “poor” would not allow you to have a new mortgage with them, unless you have a good customer record.

The_Boss wrote:

I think the problem could also lie with 2 credit card applications and a current account application in the space of 10 days back in June - I was turned down for one of those cards. So we shall see. I'm paranoid about lots of mortgage credit checks being done as I fear that they will also affect my rating

Most likely this is what makes you scoring low. Also check Electoral Roll info.

No need to wait until your file clears. Apply now and if refused appeal with your reports and proof of earnings enclosed. Make your case clear to underwriters and you have a good chance. Previous searches can be ignored.