credit utilization question

OceanSound
OceanSound Posts: 1,482
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edited 28 September 2018 at 6:02AM in Credit file & ratings
Trying to figure out if having a low utilization is better than having less total credit when applying for a new credit card. Maybe it depends on the card applied for?

For example, I have following credit limits and balances:

Halifax Clarity
-£5900 limit –-- Balance £0

M&S Credit Card -- £4000 limit –-- Balance £3200

Tesco Credit Card---£2200 limit –-- Balance £2150

MBNA Credit card -£4200 Limit --- Balance £4100

Barclaycard –
£400 Limit –---- Balance £20


I applied for the cards in the order listed above. When I applied for the Barclaycard late last month, the balance on the Clarity card was £0. This is because I only use that card for cash withdrawals, so pay the transactions soon as they are posted. (as opposed to waiting until the statement date; to keep interest to a minimum)

Not sure if Barclaycard used the credit reference agency data from the previous month when they came up with this credit limit. Because my statement balance for the clarity card on 16 August (statement date) was just over £1000 (I had made some purchases that month). Even then, I'm not utilizing much of the credit limit on that card. Perhaps, Barclaycard made decision on the £400 limit because my utilization on the other cards are high?

Anyway, now I want to apply for a CapitalOne card. However, before applying, should I ask Halifax to reduce the limit on the Clarity card. That way, my total credit available figure goes down.

Or would that actually make matters worse because reducing the credit limit will drive my total credit utilisation sky high?
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Comments

  • With £18-£19k of credit available to you already why do you need another card?

    Don’t reduce any existing limits.

    What’s your salary?
  • OceanSound
    OceanSound Posts: 1,482
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    !!! wrote: »
    With £18-£19k of credit available to you already why do you need another card?

    Don’t reduce any existing limits.

    What’s your salary?

    42,000 p/a (before tax)
    Don’t reduce any existing limits.
    If I reduce the clarity card limit, wouldn't it allow capitalone to offer me a higher limit.
    ....why do you need another card?'
    I need to do a balance/money transfer from the M&S card, when the 0% purchases offer ends in November. I'd be glad to be done with that card to be honest. M&S bank have driven me up the wall more often than not.:mad:
  • Nebulous2
    Nebulous2 Posts: 5,073
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    I don't mess with limits, only take what I get. For more than 20 years I've had limits in excess of my salary. I'm not good at closing cards and at times I've had limits in excess of twice my salary.

    That Barclaycard is a stand-out low one though, it certainly looks as though something has spooked them. Have you had several hard searches recently? Had a big increase in the balance you're carrying? Moved address?
  • BoGoF
    BoGoF Posts: 6,969
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    You do realise you are entering the realms of sub-prime with Capital One. Is the card you are applying for 12 months 0% on balance transfers? What are you going to do in 12 months.

    In all honesty it looks like you are kicking the debt can down the road and sooner or later you are going to run out of options.
  • You could reduce any combination of limits and still not get a high limit on a new card.

    Besides you would need to wait 4-6 weeks after reducing any limits for the banks to update the CRA’s with the reduction before any new potential creditors see the reduction in place.

    HSBC are known to be good with limits and promos although since M&S are part of HSBC you won’t be able to transfer the balance between those 2 cards.

    Lenders don’t just look at utilisation they will look at current credit balances, limits, risk etc etc
  • nic_c
    nic_c Posts: 2,928
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    You have 2 cards at 97% of their limit and another at 80% - there is this factor too. Lowering the clarity will increase your overall utilisation, so whilst your available credit would go down utilisation goes up, so doubt it will achieve what you want.

    Your available credit is under 50% of your wage so not sure if its as much a factor as you think. Another bank may give you a much higher limit than Barclays.

    Have you asked Halifax if they have a BT offer?
  • OceanSound
    OceanSound Posts: 1,482
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    nic_c wrote: »
    You have 2 cards at 97% of their limit and another at 80% - there is this factor too. Lowering the clarity will increase your overall utilisation, so whilst your available credit would go down utilisation goes up, so doubt it will achieve what you want.

    Your available credit is under 50% of your wage so not sure if its as much a factor as you think. Another bank may give you a much higher limit than Barclays.

    Have you asked Halifax if they have a BT offer?
    Yes, they have. I applied for BT card two months after applying for clarity. It was instantly declined. It's as if it didn't even go through the credit checks (because usually this takes a couple of minutes). Also, checking all three of my credit files, I can see no hard check for that application.

    Halifax has lots of details on their website on how customers can spread their credit across two cards. Although, it seems I may have to wait a while before applying to halifax again. Perhaps not, since it wasn't a reject (hard search) that has registered on the credit file?
  • nic_c
    nic_c Posts: 2,928
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    BT on an existing card wouldn't be a hard search! You could phone them up. Could be many reasons for the rejection, such as requesting too high an amount
  • Ben8282
    Ben8282 Posts: 4,821
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    Reducing the limit on your Halifax card will not assist. You do not have an excessive amount of available credit and all of your credit limits are pretty low anyway.
    What would assist you is reducing the balances ie repaying some of the debt. I am guessing these are all at 0% with only minimum payments being made each month. and now you are asking to borrow more.
    I think you are unlikely to get much more until you repay something.
  • OceanSound
    OceanSound Posts: 1,482
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    Ben8282 wrote: »
    Reducing the limit on your Halifax card will not assist. You do not have an excessive amount of available credit and all of your credit limits are pretty low anyway.
    What would assist you is reducing the balances ie repaying some of the debt. I am guessing these are all at 0% with only minimum payments being made each month. and now you are asking to borrow more.
    I think you are unlikely to get much more until you repay something.
    Reducing the credit limit on Halifax Clarity (say by £3000) then asking for £3000 from another provider is not asking to borrow more.

    Halifax is currently offering me 9.9% APR for 3 months on balance transfers. It's good, but I'm aware of other (better) offers out there.
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