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  • FIRST POST
    • skybluesaver
    • By skybluesaver 16th Feb 14, 3:40 PM
    • 290Posts
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    skybluesaver
    Credit card limit utilization
    • #1
    • 16th Feb 14, 3:40 PM
    Credit card limit utilization 16th Feb 14 at 3:40 PM
    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.
Page 1
    • The Boss
    • By The Boss 16th Feb 14, 3:44 PM
    • 5,715 Posts
    • 3,774 Thanks
    The Boss
    • #2
    • 16th Feb 14, 3:44 PM
    • #2
    • 16th Feb 14, 3:44 PM
    You don't have a credit score, so this cannot be damaged.

    Generally best to stay below 50%
    • skybluesaver
    • By skybluesaver 16th Feb 14, 3:59 PM
    • 290 Posts
    • 57 Thanks
    skybluesaver
    • #3
    • 16th Feb 14, 3:59 PM
    • #3
    • 16th Feb 14, 3:59 PM
    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
    • #4
    • 16th Feb 14, 5:35 PM
    • #4
    • 16th Feb 14, 5:35 PM
    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.
    Last edited by jamesd; 16-02-2014 at 5:37 PM.
    • CLAPTON
    • By CLAPTON 16th Feb 14, 5:49 PM
    • 41,651 Posts
    • 30,691 Thanks
    CLAPTON
    • #5
    • 16th Feb 14, 5:49 PM
    • #5
    • 16th Feb 14, 5:49 PM
    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.
    Originally posted by skybluesaver
    your best strategy is to pay in full each month

    why do you want additional credit?
    • skybluesaver
    • By skybluesaver 16th Feb 14, 6:02 PM
    • 290 Posts
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    skybluesaver
    • #6
    • 16th Feb 14, 6:02 PM
    • #6
    • 16th Feb 14, 6:02 PM
    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
    • By YorkshireBoy 16th Feb 14, 6:28 PM
    • 30,459 Posts
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    YorkshireBoy
    • #7
    • 16th Feb 14, 6:28 PM
    • #7
    • 16th Feb 14, 6:28 PM
    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.
    Originally posted by skybluesaver
    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
    • #8
    • 16th Feb 14, 6:37 PM
    • #8
    • 16th Feb 14, 6:37 PM
    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
    • By skybluesaver 16th Feb 14, 7:00 PM
    • 290 Posts
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    skybluesaver
    • #9
    • 16th Feb 14, 7:00 PM
    • #9
    • 16th Feb 14, 7:00 PM
    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
    • By Cycrow 17th Feb 14, 1:25 PM
    • 2,601 Posts
    • 1,474 Thanks
    Cycrow
    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.
    Originally posted by jamesd
    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
    • By skybluesaver 17th Feb 14, 3:10 PM
    • 290 Posts
    • 57 Thanks
    skybluesaver
    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.
    • CLAPTON
    • By CLAPTON 17th Feb 14, 3:19 PM
    • 41,651 Posts
    • 30,691 Thanks
    CLAPTON
    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
    Originally posted by Cycrow
    were you paying in full each month?
    • eskbanker
    • By eskbanker 17th Feb 14, 5:52 PM
    • 9,398 Posts
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    eskbanker
    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.
    Originally posted by skybluesaver
    If you're paying them off in full every month, there's no need to make extra payments in between clearing the monthly statemented balances.
    • skybluesaver
    • By skybluesaver 17th Feb 14, 7:02 PM
    • 290 Posts
    • 57 Thanks
    skybluesaver
    When i view my credit report it quite clearly shows the current credit card balances, credit limit & how much spent & paid each month. It also gives a percentage of used available credit & anything over 30% utilization is shown as a negative point.
    • YorkshireBoy
    • By YorkshireBoy 17th Feb 14, 11:19 PM
    • 30,459 Posts
    • 18,383 Thanks
    YorkshireBoy
    When i view my credit report it quite clearly shows the current credit card balances, credit limit & how much spent & paid each month. It also gives a percentage of used available credit & anything over 30% utilization is shown as a negative point.
    Originally posted by skybluesaver
    That's what Experian (or whoever) think. What matters more is what prospective lenders will think...and it won't necessarily be the same as Experian's (or whoever) generic view of credit utilisation.

    Yes, if you're carrying a 10K debt out of 30K available, making minimum payments, not on a promotional rate, and on a 30K salary, prospective lenders may view it (perhaps slightly) negatively, but if you've small limits, a reasonable salary, and are clearing in full each month then they'll not be alarmed by your 30% month-on-month utilisation.

    All in my opinion of course.
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