Hi Everyone,
First time poster, be nice :) I'm looking at possible applying for a mortgage solo at some point soon, and want to reduce my CC limits which have increased over time. Can anyone advise if this is A) reflected on my credit report, or B) reflects badly on my in any way (esp. if it's right before a loan application)?
Googling for it only seems to bring up US information.
Wrong thread?
A) - No, they shouldn't need to do a credit check to lower your limit
B) - I can't think of any negatives, it's reducing your potential debt load, and a lower potential debt is good from the mortgage loaners pov.
Some mortgage brokers will encourage you to lower your credit limits to give you a better chance of being approved for the amount you require. High credit card limits is a negative even if you pay your card off each month
Does anyone know for certain how Australia's shift to positive credit scores has affected this? I thought the algorithms they use now are pretty much the same as in America.
There (and I thought here now) it's better to have a higher limit so you're using less of it. The credit score algorithm rewards low usage, so everyone recommends accepting the highest limit you're offered but never letting your balance get over ~20% of that limit (by paying some of the account before you even receive the bill, if needs be).
What chumlee says about mortgage brokers could still be true, under either system.
The big 4 banks aren't sharing their info with this new positive bureau thing so not sure how accurate the scoring system is at the moment.
A couple of months ago I lowered my CC limit from $20k to $10k when I was looking to buy a property, the limit was effective pretty much immediately. The only thing this did, was allow me to borrow more. No negative impact.
I have lowered my limit in the past.
I was stunned when Westpac told me that if I lowered my limit I wouldn't be allowed to raise it again for 6 months or something.
Talk about cutting off your own nose.
Pissed me off enough that I've been thinking about changing cards ever since.
Most financial institutions have this policy. All part of responsible lending legislation. I took out a margin loan with commsec and didn't draw on it for a few months and got a call from them saying at the 6 month mark they would close my account unless I started to draw down on it
thats a standard answers. what it means if you want to raise it you need to go through a credit application again. which you never need one to raise throughout the length you have stayed with them
i have reduced almost double the limits.. it just inconvenience as you used to the high limits .. it is always better for loan approval (you need 2 months credit card statement to avoid questions)
Say initial limit $10,000, double the limit = $20,000, so your new limit is $10,000-$20,000 = -$10,000?
my bad, it should mean half of my original limits
NO IMPACT. Will increase borrowing power. Hope that helps.
I remember getting an awards credit card with CBA the day I turned 18, I was earning probably $18,000 a year at the time (about 8 years ago). It only had a low limit but they didn't hesitate in giving me one (was also a full-time student).
You won't be earning many points with the spending you are likely to be doing though (assuming you save a fair chunk of your APA and spend the rest). Unless you are pumping $20k+ per year through a credit card you'll struggle to amass any decent awards points on any card.