Closing credit card accounts

sunny-2009

Hi, am hoping for some advice please.

Am hopefully buying a house in few months time and I have 3 credit accounts at the minute, 2 with small balances (£1800 and £900) The 3rd account is an old visa account that has been open for around 7years and was my 1st credit card.

I would like to cancel the account and clean up my credit file. Even though Im aware it will still be on file, just not open. Have read on the net that if you close the oldest account, then lenders cant see how far back you have been borrowing. (Hope im wording this ok!)

Should I maybe just reduce the limit seeing as I dont use it and free up some available credit?

Grateful for any advice at all!

lisyloo

Have read on the net that if you close the oldest account, then lenders cant see how far back you have been borrowing

I don't understand how that works.
History only goes back 6 years anyway.

Should I maybe just reduce the limit seeing as I dont use it and free up some available credit?

What have you got against closing it??

Pros for closing
1) reduce available credit
2) less oportunity for fraud without you noticing
3) less opportunity for dormancy fees to be introduced without you noticing
4) gain access to potential new customer deals after a period

Cons for closing
1) Loss of one line of credit

If the balance is small then it's unlikely to make a huge difference relative to a mortgage.

I'd close it but I like things as tidy as possible.

sunny-2009

Thanks for replying. I've no idea how the applying for a mortgage works as Im a FTB, so hence why I took to the net of trying to find out some info on closing accounts. I dont have anything against closing it, I do want to close it, just needed reassurance that its the best thing to do.

CLAPTON

some wouldn't see 1,800 and 900 as particularly small balances
if you are concerned about getting a mortgage it's more important to pay these debts off that concern yourself about the third unused CC

lisyloo

just needed reassurance that its the best thing to do.

Opinions are a little split.
If you close it you reduce your available credit.
Now this won't make a huge lot of difference in terms of applying for a mortgage (it might if you wanted another credit card).

If you keep it open you increase your % of credit used, which may be a good thing.

Personally I don't think it will may a huge amount of difference to a mortgage.

But as clapton says, why do you have these debts?
To get a mortgage you need a decent deposit, plus money for stamp duty, soilcitors fees, removals, curtains, valuation, survey etc. so having these debts isn't a great start.

It's also true that you may have higher living costs in your own home (maintenance, bills, council tax etc.) so if you are living outside your means right now, then can you cope when your owning?

I might be barking up the wrong tree and there might be good reasons for your debts, but it's worth considering these things.

sunny-2009

Well I mean they are small in comparision to what the starting amount of debt was! Am paying as much as poss to get the cards down even further before applying.

sunny-2009

Ok, I think you are slighty off the mark, without knowing any personal circumstances of mine. I actually do have a large deposit saved with my fiance and we are currently renting, so im not oblivious to costs for buying a home. Im sure im not the 1st and last person apply for a mortgage with balances on credit cards and like ive said, im trying my best to get them down even further before buying. Im definatley not living out of my means because I havent spent on the cards in ages!

lisyloo

Ok, I think you are slighty off the mark, without knowing any personal circumstances of mine.

Good, I'm glad.
Please don't take any offence as we are only trying to help and have to guess sometimes or ask if info is not apparent.
If everything is under control and you've considered everything then that's great.

Personally I think there are a lot of downwards indicators for the housing market (like the public sector budgets coming in) but that's a different story !!

I would close that card for the reasons already stated as long as you are happy with the lines of credit available to you (the other 2 cards).
In this credit crunch you cannot assume you will easily get new credit cards even if your credit rating is good, however you said you haven't used it for 7 years and you ahve two others.

CLAPTON

sunny-2009 wrote: »

Well I mean they are small in comparision to what the starting amount of debt was! Am paying as much as poss to get the cards down even further before applying.

unless the APR of the CC are 0% or very low whyever do you have savings (earning very little interest) and have debts presumably costing a lot.

sunny-2009

Thats ok, I do appreciate any advice given! It is hard to figure out someones cirumcstances. We are looking but with the budgets coming in we will prob wait til then, I just wanted to get things tidied up before then. I think it is best to close the card, I really dont know why it says to keep the oldest card account open so will just close it and have done with. Least with the other 2 ones open, im actively paying debt back.

sunny-2009

CLAPTON wrote: »

unless the APR of the CC are 0% or very low whyever do you have savings (earning very little interest) and have debts presumably costing a lot.

Most of the savings aren't mine, they are his. Mine wouldnt be enough to cover paying off the debts & I haven't saved in a while cos Ive been trying to get the cards cleared.