Close Credit Card increase mortgage chance?

hostman

Hi,

I have this month paid off a balance on a CC. I've had the card over 18 months, it has a 4k limit, now with £0 outstanding.

I have another card with another company, which I've had for four years, £2k limit, £0 outstanding.

I'll be a FTB in the near future, currently following the market and deciding when best to time the move. My question is, would it make sense closing the card with the 4k limit? I have no need for the credit available to me and I want to improve my chances of being accepted for a mortgage later in the year or in 2009 (hence why the balance has now been paid off).

Would a bank look favourably towards this or will it negatively affect my standings?

happybroker

if it's not costing you anything and you are strict enough with yourself not to use the thing then there is no harm in keeping it on. I doubt closing it would affect a bank's decision to lend though

herbiesjp

Closing it would not change anything really

It's how much the balance you have on it that counts - and how that affects your mortgage potential

By having NIL balances you are maximising your mortgage potential already.

By having kept and maintained the cards up to date, this will have helped to build up a good credit score

trulysaintly

Sorry, but have to disagree.

Any credit card with a nil balance will still show as 'immediate available credit' when a credit score is done.

Back in my mortgage underwriting days (not that long ago) you'd be surprised how many applications failed credit scoring based on 'unused' credit cards.

If you don't need it, cancel it.

herbiesjp

We'll just disagree then lol

As far as what lenders have told me - as long as the balance is nil - then it will not harm an application, or rather you will maximise your borrowing power

pm2326

i work for a bank and our underwriters always look to see how much credit someone has available..the more you have the less chance of getting the mortgage as they class it as future risk.

Personally i would say cancel them if you dont need them. if you do, just remember they could still show on your credit file for a while.

hostman

I'll cancel the 4k limit card me thinks.

hostman

No less than four times I had to assert my intention to cancel to the customer service rep before she gave in and said "ok, card now cancelled".

Bless um, they do try hard.