Does having too much credit affect your ability to get credit?
| Related: | Personal Finance•Debt & Financial Difficulty•Credit Rating |
I have a couple of store cards/catalogues which I do use and have small balances on them. Every now and then I get a letter increasing the balance on them and combined they now have something like 6k available even though my total spending across both is less than £1000.
Will having this amount of money available to me but not being used affect my ability to get credit I was looking for something new? If so, I will contact them and ask them to reduce the available credit.
Thanks in advance wonderful people/
Responses (2)
Yes it can affect new lenders when they are deciding whether to offer you any further credit. If you have an additional £5000 available to you from other sources there is always the risk that you may decide to max out on this limit and put any potential future payments to other creditors at risk. If you really don't need that level of credit it would be worth asking them to reduce it. It amazes me that they are still allowed to get away with this as the temptation it may give to people to spend more than they can afford is always there. Very sneaky in my opinion as they know that there will be individuals that cannot risk the temptation. Credit companies hate people that are able to manage their finances well!
Whilst it is possible, lenders base their decision on whether to give you credit from a risk perspective - so it is utilised credit rather than available credit that is most used. (I was told this from a friend who works with Experian).
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Cheers, didn't know that.
Excellent, thanks for letting me know. It did worry me a little and given that it is very unlikely I would ever spend that sort of money with them, I think it's best I ask the politely to extend their kind offer to someone else :)