Credit card limit utilization

skybluesaver · 16 February 2014 at 4:40PM

Hi all. Can you advise on what is an ideal percentage of credit card limit utilization to not go above for best credit scoring? For example if i have 2 cards each with £1500 limit on, total of £3000 available, what percentage of use should i try and stay below, so as not to damage my credit score too much.
Thankyou for your time.

The_Boss · 16 February 2014 at 4:44PM

You don't have a credit score, so this cannot be damaged.

Generally best to stay below 50%

skybluesaver · 16 February 2014 at 4:59PM

Sorry, what i meant is what would not look like i was overstretched to another provider if i was to apply for other lines of credit

jamesd · 16 February 2014 at 6:35PM

Most important for overstretched or not is income compared to used credit, then compared to available credit. Not getting close to utilising 100% of the credit on all cards helps to avoid looking as though you're more desperate for credit.

Close to 100% utilisation of a total of £3,000 of credit limits might be a problem for those with incomes below £10,000 or so. It would be irrelevant for someone with an income of £30,000, say, because it's just too small a portion f their income to be seen as a problem.

How long you've had the limits is also a factor, as is how long you've had the total amount owed. Longer histories for both tend to show that it's not a level that is causing you trouble.

CLAPTON · 16 February 2014 at 6:49PM

skybluesaver wrote: »

Hi all. Can you advise on what is an ideal percentage of credit card limit utilization to not go above for best credit scoring? For example if i have 2 cards each with £1500 limit on, total of £3000 available, what percentage of use should i try and stay below, so as not to damage my credit score too much.
Thankyou for your time.

your best strategy is to pay in full each month

why do you want additional credit?

skybluesaver · 16 February 2014 at 7:02PM

Not so much about wanting additional credit in the form of credit cards but may be looking at a mortgage in the near future. I only have 2 credit cards, both give rewards, pay them both off in full each month, only got £3000 in total limit between the two of them & tend to make additional monthly payments to them if i'm starting to get close to 30% of the limit utilization.
Just want to be seen as a responsible borrower, hopefully giving the best chance of getting a good mortgage deal.

YorkshireBoy · 16 February 2014 at 7:28PM

skybluesaver wrote: »

Not so much about wanting additional credit in the form of credit cards but may be looking at a mortgage in the near future. I only have 2 credit cards, both give rewards, pay them both off in full each month, only got £3000 in total limit between the two of them & tend to make additional monthly payments to them if i'm starting to get close to 30% of the limit utilization.
Just want to be seen as a responsible borrower, hopefully giving the best chance of getting a good mortgage deal.

You're worrying unnecessarily. Your credit report file will show you as spending, say, £1,500 per month and repaying the same amount the following month.

I'd say that would look very good to a mortgage lender, providing your income supports that level of spending...otherwise they'll hit you on affordability.

jamesd · 16 February 2014 at 7:37PM

Since you're paying them off in full each month they are irrelevant except that the amount you are seen to be spending can be used in mortgage affordability calculations.

I had something over £30,000 on credit cards at the time I got a FTB mortgage from a very fussy lender. Easy affordability, 75% LTV and low income multiple.

skybluesaver · 16 February 2014 at 8:00PM

I didn't think about the affordability side of it, thats a very good point & something i also need to bear in mind. Thankyou for your help.

Cycrow · 17 February 2014 at 2:25PM

jamesd wrote: »

Most important for overstretched or not is income compared to used credit, then compared to available credit. Not getting close to utilising 100% of the credit on all cards helps to avoid looking as though you're more desperate for credit.

Close to 100% utilisation of a total of £3,000 of credit limits might be a problem for those with incomes below £10,000 or so. It would be irrelevant for someone with an income of £30,000, say, because it's just too small a portion f their income to be seen as a problem.

How long you've had the limits is also a factor, as is how long you've had the total amount owed. Longer histories for both tend to show that it's not a level that is causing you trouble.

Thats not completely true, you can still struggle to get credit if you have high utilisation, regardless of income.

i was infact in the same situation you describe, my salary is 30k, i had about 3k limits, and was at over 90% use. And i struggled to get any more credit. One of the rejections even quoted the high usage as the problem
I eventually got another card at 3k, and since then, i've had much less trouble

skybluesaver · 17 February 2014 at 4:10PM

Thankyou. I think i'll keep on making the occasional extra payment to my accounts when necessary to keep them below the 30% utilization rate. Sure i read somewhere sometime ago that this was the percentage that providers thought was responsible to stay below.

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Credit card limit utilization

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