Any benefits of having a smaller/larger credit card limit?

[FreeLitres]

My Bank has emailed me to say they are reducing my credit card limit from approx £6000 to £4000 as the max I have used in the last 12 month is £500. I can however contact them to stop this move and keep my £6000 limit.

I only use my CC for occasional online purchases or foreign travel and I pay the balance off in full each month via direct debit.

Other than having the ability to make large purchases, is there any reason why I should ask to keep the higher limit on my CC? Does a high limit look good or bad on credit ratings?

[Yipper]

Keep the credit limit as high as possible (within reason) and the spending total as low as possible (within reason). Computers score your rating partly on the % of credit used up. For example, someone with 10% of a £10k limit will get scored better than someone with 90% of a £1100 limit. A high % ratio is seen (rightly or wrongly) as a sign of distressed money management. Keep it at £6k.

[Jockman]

Another outlook could be that you are assessed to be worthy of x amount of credit then it would be unwise to tie up a portion of this needlessly.

I have reduced the limit on my last 11 credit cards and ironically the one I want to increase won't let me so I churn the limit on a weekly basis ie pay it off to free it up, spend, pay off etc.

[jeff m2]

Yipper said:

Keep the credit limit as high as possible (within reason) and the spending total as low as possible (within reason). Computers score your rating partly on the % of credit used up. For example, someone with 10% of a £10k limit will get scored better than someone with 90% of a £1100 limit. A high % ratio is seen (rightly or wrongly) as a sign of distressed money management. Keep it at £6k.

Correct answer
Known as Utilisation.
I also agree with your rightly or wrongly, as they earn more from those with carried balances than those who pay off each month.

[FreeLitres]

Thanks - I asked the bank to keep the higher limit on the CC.

[55palfers]

How does it score if you use around 50% of your limit each month but pay it off in full on the statement date?

[8-P]

55palfers said:

How does it score if you use around 50% of your limit each month but pay it off in full on the statement date?

That shows you can handle your credit useage, so should be a positive