This is all about the arcane art of Credit Risk Management, so secret in many banks that even their own staff are no allowed to know how their banks credit scorecard (the way they assess credit-worthiness) works.oz_mark said:I think banks each have there own ways of determining what having a credit card means. Or maybe it is just because they ask in different ways! I have seen forms that ask for my limit, others that have just asked what the balance was etc.
Some people (e.g. me) who put just about everything on a CC would spend a fairly sizeable percentage of income paying it off
But yes, some financial institutions assess based on your balance, most assess based on your limit on the not unreasonable basis that this money is available and hence you could turn around in a week and withdraw it all. Same applies to redrawable money on your mortgage. It is a more conservative means of assessing risk but also means you are less likely to fail.
There are of course institutions who are less risk-averse.