Close paid off credit card or keep open?

You don't have a credit score, you're referring to a random made up number.

If you close an empty credit card, then you increase your "debt to available credit ratio" so bear this in mind. Lenders don't like to see that people are spending lots of their cards as it points to potential repayment problems now or in future. Ideally should stay below 50% of credit limits.

But bear in mind your total available credit to salary ratio generally shouldn't exceed 75% at the very most. Ideally you'd be at least half below that.

GingerBob wrote: »

Seems like you're fighting a losing battle on this one, Boss. I'm sure you must think at times something along the lines of "Hello!! Have I ceased to Exist?". Credit for your perseverance though.

I think perhaps the issue is that the scores are not actually made up, or random, numbers. They have been calculated. Unfortunately, lenders also calculate scores but use a different algorithm. As I mentioned in another thread, the scores are indicative; maybe not too indicative, but there we go.

It's a fact that people do not have credit scores. When people with defaults have "excellent" "scores" ahead of those with umblemished histories it sums up their worth and pretty much confirms that they are made up.

They also bear no resemblance to how lenders assess applications because of all the missing data that is not considered, let alone the differing scoring matrices. The salary alone makes a huge difference.

I too am considering the 'close card' vs available credit ratio and trying to make an assessment as to which will be more beneficial overall.

As touched on already, what lenders look for in a potential customer will vary, therefore there's never an entirely black and white answer.

coffeeowl - It's great to be clear about the myth of credit scores, but I think the thread is losing focus a little from your question about making yourself as attractive as possible to lenders (on the balance of probability) in order to secure a consolidation loan. Have I understood correctly?

Previously, I've found my bank more willing to lend than other lenders as they have a history going back years as I've banked with them since I was 14! Also, the way I secured that particular consolidation loan was in person at my branch and we went through my plans.

Essentially, I had £6kish on my bank's credit card (with a higher limit of approx £9k), an overdraft of £1.5k with them, and about £2k on other cards. I believe that my application was more successful than previous attempt with another lender, because my bank knew my history, they were winning additional business from me that they had confidence they would benefit from based on my history, and we agreed to minimise my exposure to additional credit by clearing and lowering both my overdraft allowance and credit card limit.

In branch you can have these kind of discussions and sometimes you will find that you will be more successful if you take this kind of approach - demonstrate that you're giving them business, have a good history with them, and agree not to expose yourself to (too much) more credit by closing or lowering limits on your other products with them.

Ramble over, but hopefully that helped.