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Cancel Card or reduce credit limit

Hi guys,

I have four credit cards at the moment:
Egg: 1% cashback - £500 credit limit - I use for spending
MBNA (Virgin) - £ 7000 credit limit - £5500 int.free balance transfer at the moment
Barclaycard - £5000 credit limit - Have not used for over a year and will never do so
Capital One - £3000 credit limit - have not used for over a year and will never do so.

As I am not using two of the above cards, apparently it is not good for your credit file to have too many cards, even if they are not being used. The barclaycard is useless to me, so am getting it cancelled.

However, the Capital One, gives me two free credit reports a year, and a continuous alert for any changes made to my credit file, so I would like to keep it.

What I guess I really want to know is it the fact that having a credit card on file reduces credit rating, or is the fact that having a lot of credit limit available. Hence, would it be better to ask for my credit limit to be reduced to £250, rather than cancelling the Capital One altogether?

Comments

  • BADBT_2
    BADBT_2 Posts: 41 Forumite
    Sorry- There are two more cards I forgot about!!!

    1) Lloyds TSB - Credit Limit £5050 - Used to have a 0% Balance Trfr on it, but now use none of it. However, as it is an AirMiles Duo Card, I am keeping that too in case I ever need to use it once my Egg credit limit has been used up.

    2) An HSBC Mastercard - Credit Limit £500 - HSBC gave it to me for having a current account, but again rarely used. JUST CANCELLED THAT ONE TOO.

    I think you are completely right Mozette, on the available/utilised ratio - hadnt thought about it. So, I think I am going to ask Capital One to reduce my credit limit to £500, but keep the card

    That way Ill have to following credit limits:
    Capital One: £500
    Lloyds: £5050
    MBNA (Virgin): £7000
    Egg: £500
    TOTAL = £13050

    Amount Utilised:£5500
    Ratio = 42%

    My gross income is £28000, so hopefully I should be ok, applying for another Balance Transfer card, when my virgin expires in May 2011!
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