Credit limit increase offers - good or bad?

[Whatthebarnacles]

I've been working SO hard to improve my credit score, particularly over the past year or two. I was in a right state for years with countless active cards and catalogues , plus debts that had been sold on to DCAs etc.

I finally have no defaults left on my report and my cards/catalogue balances are reducing. I can almost see the end!

My question is this...

The credit reference agencies (I view all 3 major ones) refer to credit utilisation.

Now that my bills are so much less compared to years ago, it seems all of my accounts are wanting to offer increases. And I mean all of them over the last 2 months.

I'm not interested in spending however I wonder whether I should accept so that my credit utilisation figure comes down, thus improving my score. Does it even work like that? OR am I better ignoring the offer, clearing the remaining balances and closing the accounts all together?

FWIW, my end goal is to be able to get rid of my company car (and get off the ridiculous tax code that comes with it) and instead get my own car - be it on finance or a loan to buy a second hand outright . Also, if it matters, I rent and have no mortgage (will never be able to get on the ladder).

Thanks everyone.

If you're not tempted or will likely spend and get yourself into trouble then accept the increases. It does look good if you have the credit and use some on a regular basis and pay it off at the due date. Shows responsible credit use.

I have about numerous cards with a total of about £27k limit. I don't use anywhere near this as I only spend what I have in cash.

It technically might help your credit score but credit scores are pointless.

Having high available credit could then impact your ability to secure a loan for a car (loan far cheaper than a PCP deal but lots to way up)

And congrats on making such great choices that this is even a question you can now ask

@Whyareblokesonhere Thanks for your kind comment. I've really worked my arse off and I'm finally seeing it paying off (literally!)

I won't get a loan (half decent anyway) without a good score though so whilst technically it's pointless, it's a task I have to achieve and I appreciate that fact.

The car situation - you're right. I know a loan would be better but it's going to be for work and I travel a lot so I'm thinking finance might be better in the long run. But that's yet another bridge I need to cross when I get there I guess. Never ending bridges!

@LaWench i used to have a utilisation if over 100% so to get it down to 40% is a huuuuge achievement, and the combined limits are an awful lot. Thanks for your comment, I appreciate it.

Hi OP I work for a credit card company so hopefully I can be helpful here. You've had some really good advice so far. Credit files tend to not like cards being below £1000 so if you have any with limits below that and you're offered an increase id recommend taking it. It does look good to your credit file that companies are willing to lend you more, that they think you're likely to pay it back. But the poster who said having a huge amount of available credit you could suddenly spend tomorrow may impact you getting a loan (or a mortgage-I know youve said you'll never be doing that but for anyone reading this thinking what about mortgages)

I tell my customers, when they ask me this question, to think about what your short term goal is. Do you want a car loan /mortgage next month? Or are you looking at 6 months or more down the line? If next month, you want to focus on tidying up now, paying down balances, maybe closing some cards when they hit zero if you have a few. If you are thinking 6 months or more you want to focus on building that positive history first, so go for the increases. You can always close the cards in say September if you're thinking of a car loan in November (to give it chance to show as closed on your credit file, so the car loan company knows you can't go and spend X Amount tomorrow as its closed now)

@Insidelaurashead ahh that makes sense. Showing other cresitors that I'm "worthy" of the increases but closing them before committing to a larger loan. Thank you so much!

I won't get a loan (half decent anyway) without a good score though so whilst technically it's pointless, it's a task I have to achieve and I appreciate that fact

This is true but it's only because in theory the score reflects your credit history, the score itself is fictional, sounds like you are doing all the right things though so with a bit more patience and perseverance, hopefully you'll have plenty of great options in the not too distant future.