/ Credit Score And Cards

How to manage your credit allowance

This is all about how much credit you have available to spend on credit cards and overdrafts. It’s the difference between your combined debit balances on your cards and bank accounts and your combined credit limits/overdraft limit.
You need to find the fine line between not having too much — as lenders may think you could rack up more debt by spending it all — and not getting too close to your limits, which makes it appear as if you are in desperate need of cash.

The general rule of thumb is that if you have debts, Mortgage lenders prefer that they make up less than 50% of your available credit. So if you have a combined credit limit of £20,000, they’d rather you use less than £10,000 of it.

If you are already following this rule it’s also wise to avoid lowering your credit limit so not to appear as if you are using it all up and hence seem desperate.
It is also best to avoid having lots of credit available than you necessarily need or ever use. e.g tens of thousands of pounds.
There is no perfect guide in this case as all lenders look at things differently, As always, it’s best to use less than 50% of available credit.It is also unclear how credit agencies such as Equifax score this.

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How to manage your credit allowance
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