£51000 in

andys15

CREDIT......., but by canceling am i actually damaging my credit score?????

Hi I will be re-mortgaging Apr next year, so thought I would get rid of some of my credit cards and overdrafts I dont use.

Remarkably it all adds up to £51000. I have just cancelled 2, reduced two and lowered my overdraft to £1000. I was about to cancel my virgin CC, when I thought if I was actually damaging my credit score. I have been on MSE long enough now to never add much to the cards, my virgin CC has not had a balance for a while(my wife has a small balance on hers).

The reason I ask is because the last time I checked my credit file, I was using something like 20% of my available credit. If I cancel and/or reduce the Credit cards, my usage of my available credit could jump to 90%. Would that look like I am always maxing out my available credit to some financials institutions.

Many Thanks

Percy1983

It seems to be a balancing act, as you say seeming like you are near you max can look bad but also too much available can look bad. Personally I just keep things open if they have a use.

andys15

This is what I have done so far. Should I do anything else or just leave it. Debt in red.

Nationwide. Limit £5700 cancelled
Tesco. Limit £1750 reduced to £750(never a balance, use it for clubcard points and pay off in full)
Natwest Limit £18100(never asked for that) £6503. I was going to reduce to £7500.
Halifax Limit £12000(only got last month for hols) Reduced to £2000
(it was a great card Clarity card so kept some limit incase of holiday in future)
Overdraft Limit £4500 reduced to £1000 (just in case, but not used it for about a year)
Virgin CC Limit £9200 was going to fully cancel.

My only other credit for me personally is a loan which will be paid of by the time I remortgage in April.

LillythePink

Why do you need an overdraft of that amount?

I have an od of £100 which is only a buffer in case there is a payment going out and forgot to transfer some money to cover.

You will have spare credit on your cards if you need it

MFWannabe

andys15 wrote: »

This is what I have done so far. Should I do anything else or just leave it. Debt in red.

Nationwide. Limit £5700 cancelled
Tesco. Limit £1750 reduced to £750(never a balance, use it for clubcard points and pay off in full)
Natwest Limit £18100(never asked for that) £6503. I was going to reduce to £7500. If you reduce this to £7500 then it will look like you are using almost all available credit, Maybe reduce to £12000?
Halifax Limit £12000(only got last month for hols) Reduced to £2000
(it was a great card Clarity card so kept some limit incase of holiday in future)
Overdraft Limit £4500 reduced to £1000 (just in case, but not used it for about a year). If you've not used then reduce to a few hundred; you will still have cards to use in emergency
Virgin CC Limit £9200 was going to fully cancel. Instead think about reducing limit. MBNA are good for offers such as 0% deals which you may want in future

My only other credit for me personally is a loan which will be paid of by the time I remortgage in April.

When loooking to remortage lenders will look at available credit and how much you are using but will also look at it in percentage to your income.

saltnvinegar

The trouble is different lenders will also have different/scoring criteria so there is not necessarily a right answer.

So

1) Have no credit at all, no credit repayment history can be detrimental

2) Having £51k of available credit but only using it could mean you are responsible but also be a risk as they could give you a mortgage and immediately afterwards you go on a spending spree to furnish your house and max yourself out

3) Having less credit lines open and using 90% could be seen as risky

4) Paying off your cards in full every month can be seen as risky as those creditors simply haven't been making any money out of you in interest (which is what they want!)

A crucial thing you haven't mentioned yet is what the LTV ratio is on your home. If you have been paying all of your creditors on time so can demonstrate that you are a safe borrower this may have more influence on your re-mortgage options than anything else.

SnV

andys15

saltnvinegar wrote: »

The trouble is different lenders will also have different/scoring criteria so there is not necessarily a right answer.

So

1) Have no credit at all, no credit repayment history can be detrimental

2) Having £51k of available credit but only using it could mean you are responsible but also be a risk as they could give you a mortgage and immediately afterwards you go on a spending spree to furnish your house and max yourself out

3) Having less credit lines open and using 90% could be seen as risky

4) Paying off your cards in full every month can be seen as risky as those creditors simply haven't been making any money out of you in interest (which is what they want!)

A crucial thing you haven't mentioned yet is what the LTV ratio is on your home. If you have been paying all of your creditors on time so can demonstrate that you are a safe borrower this may have more influence on your re-mortgage options than anything else.

SnV

My LTV is roughly 85%. I have never had a late payment. I think the advice about reducing the Natwest limit is what I will do. I wont be able to clear my Natwest Credit Card by the time I remortgage, but will probably have it down to £4000 hopefully less. I could then perhaps do a 0% transfer to my Virgin card(who are always badgering me about BT). My Natwest is 0% until July. I am in a catch 22 situation. We want a new kitchen and convert some of the garage, which I believe could make my LTV 75%, but in order to that I need to get finance, but if I get finance I worry that I might struggle getting a remortgage. I wanted LTV as 75%, to get a specific mortgage deal, although come Apr, who knows what deals will be out there, and they probably wont be as good as they are now..