New CC application, should I lower existing card limit and apply at bank with existing accounts?

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haggismn
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New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby haggismn » Thu Jan 07, 2016 2:00 pm

I have an old nationwide credit card which is of little use apart from the 0.5% cashback and commission free foreign purchases(no interest free period, 5k limit). I want to apply for a new card, possibly from a bank who I have existing accounts with (TSB or Halifax) in order to get a new interest free period. I have a few questions;

Should I lower the available credit on the Nationwide card to improve chances of being approved? I wouldn't go anywhere near 5k but I am aware that available credit is used as a variable in credit checks.

Will applying to a bank I have existing accounts with improve chances of acceptance? The TSB is being used actively and Halifax Reward is just ticking over. Should I instead be looking at better offers like from MBNA, Sainsburys and Post Office, with whom I have no previous relationship with?

While TSB don't have the greatest offers, at the moment I am more likely to chose to apply there due to the existing relationship. Halifax offers are much better but I am concerned they will dislike the unused current account. Can anyone comment on whether TSB is a safer option than looking elsewhere, or does it really not matter?

Alternatively, does anyone know how flexible Nationwide are with offering new interest free periods? IIRC their terms state one a year gap between closing the card before applying to get a new one but would prefer not to close the existing account.

Thanks in advance for any suggestions.

StringyBob
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby StringyBob » Sun Jan 10, 2016 2:48 pm

Hi,

Not sure if lowering limits helps or not (would be interested to know other thoughts on this), banks / credit card companies seem to have a strange way of calculating who to accept and reject.

I've had mixed results when applying. My wife was rejected recently by the TSB even though she has a good credit history and has a current account with them.

I firstly go for the cards offering interest free deals with no charges initially e.g. Tesco, Sainsbury, Post Office and Santander off the top of my head then go for the ones that charge a small transfer fee.

chickenboy
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby chickenboy » Thu Jan 14, 2016 6:01 am

I do NOT think lowering limits helps - if you look at your clearscore rating for example, the indicators improve if you have unused credit - or to put it the other way, if you are nearly maxed out on your existing cards, it looks bad.

stooz
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby stooz » Fri Jan 15, 2016 1:53 pm

Lower limits only really have an effect when the sum of all your limits is far superior to your income, or the minimum payments would be difficult to do.
eg 25,000 at 1% min payment is £250 a month. If after mortgage etc you don't have £250, then banks won't want to lend you more money.

Also the banks have to calculate the risk that you can without warning, spend to the limit. So if you hardly use your cards and they combine to limit of £100,000 say - then that is the "risk" they would judge giving you any further limit.

kempiejon
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby kempiejon » Fri Jan 15, 2016 3:15 pm

I'd say I agreed with Stooz that it's only when you're at multiples above earnings/affordability in limits, it might help to bring them down, but I don't know what I base that thought on. I did have a go at reducing my stable of cards a few years back following a flurry of rejections and, after sitting it out for 6 months, was successful at getting new cards and upping existing limits to well above my salary.

I do recon that using existing banks can be better than a unsolicited web application. Do banks offer invites to cards still these days? I bank online and HSBC & FD have "offers for you" or "apply now" but I used to get mail shots inviting me to take out cards

Jamesd
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby Jamesd » Mon Jan 18, 2016 8:42 pm

I know of a Lloyds current account customer who's regularly getting pre-approved credit card offers in the post from them so at least some banks do try to cross-sell.

joker
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby joker » Mon Jan 18, 2016 10:05 pm

My application to Halifax a few months back resulted in a small lmit. My limit from lloyds this week was much larger.

They are the same group.

The difference? I have a fully used club account and an almost full club RS with lloyds, but only a few pounds in each of my Halifax reward CAs.

So it looks to me that those banks do consider your current status with them but don't share internal data. I'll be fully populating my BoS vantage accounts before I apply for a BoS BT card in a few months time.

planteria
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby planteria » Wed Jan 20, 2016 12:10 am

fwiw though joker, i've always found that Lloyds have been far more generous, and flexible, re. limits than Halifax. this has included times when i've had active, relatively high balance Halifax accounts, and no accounts at all with Lloyds.

StringyBob
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby StringyBob » Thu Jan 21, 2016 5:04 pm

Some interesting info above that I will take on board.

I've only been stoozing for about 18 months, shame I didn't know about this earlier during the glory days.
I got my first rejection from Lloyds but by then I'd already got a few cards on the go. Got Halifax a bit after this but only £1500 limit and reduced length of 9 months.

I have just got myself 18k from MBNA so will open a Lloyds Club account and a BoS Vantage and hopefully will be able to get decent limits off them in the future.

sparkey1
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Re: New CC application, should I lower existing card limit and apply at bank with existing accounts?

Postby sparkey1 » Tue Aug 23, 2016 11:11 pm

No. Credit reports prefer limits above £1000. Also you reduce your overall credit availability, so when you actually use it, you are utilising a higher percentage. So, let's imagine your car broke and you spent £1000 on repairs. Your using 20 percent of your limit. But what if you had dropped your limit to £1000. Now you would be maxed out... And therefore a higher risk, with a lower credit score. It's better keeping the 5 k limit and keeping the card open.


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