Credit utilisation
Discussion
I've got HP finance on my car, a bank loan and a credit card which I'm using for a 0% balance transfer (still got over a year to go before I need to move the balance to a different balance transfer offer).
I also have 4 other credit cards which were previously used for balance transfer offers, but have been empty since those offers expired.
Including all of those cards I have around £40k credit available - of which I'm using around £15k.
I would like to buy a replacement car (£10k-ish) on finance, but it will need to be approved before my current car is sold and finance settled.
Am I more likely to be offered a good rate if I have lots of available/unused credit? Or should I first close the old credit cards to reduce the amount of available credit I have?
I also have 4 other credit cards which were previously used for balance transfer offers, but have been empty since those offers expired.
Including all of those cards I have around £40k credit available - of which I'm using around £15k.
I would like to buy a replacement car (£10k-ish) on finance, but it will need to be approved before my current car is sold and finance settled.
Am I more likely to be offered a good rate if I have lots of available/unused credit? Or should I first close the old credit cards to reduce the amount of available credit I have?
I know Sarnies gonna kick my butt, however......
My tiny brain computes that you are ascribed a certain credit worth. This is calculated through various different methodologies by various different raters but that's not the point here.
If you are good for, say, £400,000 credit then it stands to reason that you have just used up a lot of that in dormant credit cards where you could meet a new woman and she fancies a trip to Vegas.
Now, to answer your question directly, this will have a limited impact on small ticket items like cars, kitchens etc but will have more of an impact on bigger items like a mortgage.
Other opinions are equally, if not more, valid.........
My tiny brain computes that you are ascribed a certain credit worth. This is calculated through various different methodologies by various different raters but that's not the point here.
If you are good for, say, £400,000 credit then it stands to reason that you have just used up a lot of that in dormant credit cards where you could meet a new woman and she fancies a trip to Vegas.
Now, to answer your question directly, this will have a limited impact on small ticket items like cars, kitchens etc but will have more of an impact on bigger items like a mortgage.
Other opinions are equally, if not more, valid.........
It just depends on the lender.
Some lenders penalise you for having a lot of unused available credit on the premise that you could max it out at any time.
Some lenders will be more likely to lend to you if you have a low credit utilisation as it looks like you are not living beyond your means and can manage debts and your finances.
Just depends if that lenders glass is half full or half empty...........
Some lenders penalise you for having a lot of unused available credit on the premise that you could max it out at any time.
Some lenders will be more likely to lend to you if you have a low credit utilisation as it looks like you are not living beyond your means and can manage debts and your finances.
Just depends if that lenders glass is half full or half empty...........
Sarnie said:
It just depends on the lender.
Some lenders penalise you for having a lot of unused available credit on the premise that you could max it out at any time.
Some lenders will be more likely to lend to you if you have a low credit utilisation as it looks like you are not living beyond your means and can manage debts and your finances.
Just depends if that lenders glass is half full or half empty...........
So you would advise just follow your gut on the situation and what you're happier with, rather than doing anything to try and improve your chances?Some lenders penalise you for having a lot of unused available credit on the premise that you could max it out at any time.
Some lenders will be more likely to lend to you if you have a low credit utilisation as it looks like you are not living beyond your means and can manage debts and your finances.
Just depends if that lenders glass is half full or half empty...........
Venturist said:
So you would advise just follow your gut on the situation and what you're happier with, rather than doing anything to try and improve your chances?
Yep............make decisions for whatever suits you best..........whatever you decide, some lenders will look dimly on, others won't be bothered!Gassing Station | Finance | Top of Page | What's New | My Stuff