Closing Old Accounts - Good Or Bad??

brookerbabyisababy

I am a bit confused I have some accounts which I don't use and was thinking about closing. However I have been reading the MSE broads and have come across two points of opinion - but wasn't sure which was true?? Is it good or bad closing accounts or reducing your limit and then applying for new credit??

I currently have two credit cards which I don't use and about 3 different catalogue accounts which I pay off monthly (I have only opened these to improve me score anyway).

anna42hmr

like anything with finance it depends on everyones personal circumstances, and not to mention each card companies procedures and what they take into account on peoples credit history etc

i am an example that leaving cards open does not necessarily have a negative effect on credit card applications, i currently hold 8 credit cards which are open (mint, halifax,mbna, nationwide, natwest, lloyds tsb, egg and the one i aquired today was capital one platinum)

most of the cards i have no balence on, and all my cards that do are paid in full each month (via direct debit) (the exception will be the cap 1 card, as i applied for the 0% deal until nov next year)

the credit limits i hold on these cards vary between £1800 and £6900, however this did not stop cap 1 giving me a 6k limit on the new card (not that i need any where near that!) thankfully i am good with money as i am not surprised that people get in trouble financially, and if you think of that fact that i am only 26 and earn circa 17k a year the credit available to me is considerably higher than my income! (not to mention i am currently paying off a small loan)

i assume that it helps that i pay off every month without fail and never missed any payments etc, i know people are going to tell me to cancel or close some of the cards, and if i am honest it is 3 things that have stopped me doing so for now 1. lazieness and 2. that many of the providors send letters with special deals for balence transfers and perchases etc, you never know when that may be handy, and 3. each card has/had a purpose, ie one i use soley for internet usage, so if any online fraud happens, they only have that one card, another (nationwide) is used soley for foreign use, cap one for the 0% deal until nov 09 so i can book a holiday without dipping into savings etc

Mozette

It depends on a few things. Showing you can sensibly manage credit is good, so having some cards is desirable. If you have a lot of outstanding balance compared to your credit available, that is not such a good thing - makes a new application for credit look like you might be maxing out your cards and are desperate.
Having 'a lot' of available credit is not so good, as you might go mad and end up with loads of debt you can't pay back - what is 'a lot'? Not sure to be honest! Compared to what your income is, do you think !!!! if I maxed out I'd not pay it back in several lifetimes - possibly 'a lot'.
Also, if you have old cards which then have good offers for new customers, well, you're an existing customer so probably can't take advantage.
I've got some long standing cards - one for cash back, one for overseas transactions, and a couple affliated with stores to get various benefits - then I'll have a card for a good offer, use it and when the offer's up, close it.
On the whole it's worked for me, though everyone's circumstances are different of course.
Hope this is helpful.