Managing Credit Facilities
Learn how credit utilisation affects your score, when to request limit increases, whether to close old accounts, and how to monitor your overall credit portfolio.
Managing Credit Facilities
Once you have credit cards, loans, and other facilities, managing them well is an ongoing activity. Smart management protects your score and keeps borrowing costs low.
Credit Utilisation — The 30% Rule
Credit utilisation is the percentage of your available credit that you are currently using. It is one of the most influential factors in your credit score.
Utilisation = Total balances ÷ Total credit limits × 100
| Utilisation | Score Impact |
|---|---|
| 0–25% | Very positive |
| 25–50% | Neutral to slightly negative |
| 50–75% | Negative |
| 75–100% | Very negative |
Utilisation is calculated per card and across all cards. Even if your overall utilisation is 20%, a single card at 90% can still hurt your score.
Example: You have three cards:
| Card | Limit | Balance | Utilisation |
|---|---|---|---|
| Card A | £5,000 | £500 | 10% |
| Card B | £3,000 | £2,700 | 90% |
| Card C | £2,000 | £0 | 0% |
| Total | £10,000 | £3,200 | 32% |
Even though your overall utilisation is 32%, Card B at 90% sends a negative signal to lenders. Spreading the balance more evenly would help.
The Multiple Cards Strategy
Having multiple credit cards is not inherently bad — in fact, it can help your score by:
- Increasing total available credit → lowering overall utilisation
- Diversifying your credit mix → lenders like to see you managing multiple accounts
- Providing backup → if one provider reduces your limit, others remain
However, only open new accounts when you have a genuine need. Each application generates a hard search.
Should You Close Old Accounts?
Generally, no. Closing an old credit card:
- Reduces your total available credit → increases utilisation ratio
- Shortens your average account age → can lower your score
- Removes a track record of responsible management
Exceptions where closing makes sense:
| Reason to Close | Explanation |
|---|---|
| Annual fee you don't use | A £150/year rewards card you no longer use is costing you money |
| Temptation to spend | If having the card available leads to overspending |
| Too many recent accounts | If you opened several cards in a short period, lenders may view this negatively |
| Fraud concerns | If the card number has been compromised and the provider cannot reissue |
If you do close a card, choose the newest one with the lowest limit — this minimises the impact on both your average account age and total available credit.
Requesting Credit Limit Increases
A higher credit limit lowers your utilisation (assuming your spending stays the same). Many UK providers allow you to request an increase online or via app.
Soft search increases: Some providers (e.g. Amex, Barclaycard) perform a soft search for limit increase requests — this does not affect your score.
Hard search increases: Others (e.g. some Lloyds, HSBC products) perform a hard search. Check before requesting.
When to request:
- After 6–12 months of perfect payments on the card
- When your income has increased
- When your overall utilisation is creeping above 30%
When NOT to request:
- If you are about to apply for a mortgage (avoid any credit changes in the 3–6 months before)
- If you tend to spend up to your limit
- If you have recently missed a payment
Monitoring Your Credit Portfolio
Treat your credit facilities like a portfolio that needs regular review:
| Check | Frequency | What to Look For |
|---|---|---|
| Balances and utilisation | Monthly | Keep each card below 30% |
| Direct Debits are active | Quarterly | Ensure payment automation is working |
| Interest rates | After BoE rate changes | Variable rates may have increased |
| Credit report | Quarterly | Errors, unknown accounts, fraud |
| Annual fees | Annually | Are you getting value from fee-paying cards? |
| Unused cards | Every 6 months | Make a small purchase on dormant cards to keep them active |
Keeping Dormant Cards Active
If you have a card you rarely use, the provider may close it for inactivity (typically after 12–24 months of no transactions). To prevent this, make a small purchase every 3–6 months — even a £1 transaction is enough — and pay it off immediately.
Rate Changes and the Bank of England
Many credit card rates are variable and linked to the Bank of England base rate. When the base rate rises, your credit card APR may increase. Providers must give you 30 days' notice of a rate change, and you have the right to reject the increase and close the account (repaying the balance at the old rate).
Check your statements and letters for rate change notifications — they are easy to miss.
Explain Like I'm 5
Think of your borrowing like a toy box. If you have a big box but only fill it halfway, that looks good — it means you are not being greedy. Do not throw away your oldest toy box, because grown-ups like to see you have looked after things for a long time. And every now and then, use each toy box so nobody takes it away!
Key Takeaways
- Keep credit utilisation below 30% — both per card and across all cards combined.
- Avoid closing your oldest credit card unless it carries an annual fee you no longer justify.
- Make a small purchase on dormant cards every 3–6 months to prevent the provider closing them.
- Check whether a credit limit increase triggers a soft or hard search before requesting one.
Track all your credit facilities, utilisation, and payoff progress in one place.
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