Should I keep my 'Sub Prime' account open?

aldredd

Hello!

I've had a 'sub prime' credit card with capital one for a few years now, as my credit rating wasn't great at the time. As anyone will know, the interest rate is ridiculous (around 33.3% for me now - I think even higher for new customers!).

My credit rating has improved a lot recently as I get a grip on my finances.
As such, I now have a Tesco Credit Card with a substantially better rate. (Hurrah!)

This is one of only 3 long-standing credit product I now have in my name (other than bank-accounts), along with my Amex and a catalogue account. All other 'active' accounts I hold are no more than maybe 18 months old.

However, I've heard that for some creditors, having a sub-prime product can go against you in their scoring.

In light of this, should I close the Cap1 account once I've cleared the balance (won't take long), or keep it as a long-standing (3 or 4 years) well maintained account? (and make the odd purchase on it to keep it 'active')

Thanks for your advice

anna42hmr

I have had a cap one card for years and has not hindered me getting non sub-prime cards, over the years have had cards from lloyds tsb, halifax, mbna (2 of them - rewards, and AA) post office, nationwide and santander zero. so doesnt necessarily have any stigma attached to it.

to be honest only reason i have kept it and use it occassionaly is for the 2 free credit reports a year and credit activity alerts that you can sign up with equifax if you have a capital one card

So if you use the equifax reports then i would recommend you keep the card. Also you may want to keep it for a while as once a card is settled it dissapears of your credit report after 6 years so whilst you are still building your credit history you may wish to keep the two of them for a while, especially as it is a long standing card which you have a long history with (as long as the history is good that is, if their is any problems with it i would close it)

Just set it up so you have a direct debit for the full balence and just use it every few months to keep it active, even if its just the odd £10 transaction.

aldredd

Thanks Anna.
As it happens, i do use the experian reports, but I actually pay the subscription at the moment. Only because i've been working hard to get my profile sorted out & corrected where required, so have been wanting to check it frequently.
That said, as it's now all getting there (in fact, my experian profile is pretty much 100% clean, bar some incorrect linked address) checking twice per year probably won't hurt me.

My long term goal is to apply for a mortgage (in about 4 years I think), so as long as it doesn't have a bad stigma, which you don't feel it does, it sounds like there will be no harm in keeping it going.

BugsyBrowne

aldredd wrote: »

Thanks Anna.
As it happens, i do use the experian reports, but I actually pay the subscription at the moment. Only because i've been working hard to get my profile sorted out & corrected where required, so have been wanting to check it frequently.
That said, as it's now all getting there (in fact, my experian profile is pretty much 100% clean, bar some incorrect linked address) checking twice per year probably won't hurt me.

My long term goal is to apply for a mortgage (in about 4 years I think), so as long as it doesn't have a bad stigma, which you don't feel it does, it sounds like there will be no harm in keeping it going.

Having a sub-prime card do not go against you in the slightest unless you have late/missed payments that is,when creditors search your credit they see other credit cards as credit accounts not the name of the lender.

aldredd

Great, thanks Star-Fire. Didn't know that others lenders couldn't see the names of your creditors. Very useful to know.
And no - no late / missed payments (had 1 a couple of years ago, but as I fixed it in time, it didn't hit my file).

neal_credit_card

Hi not sure if anyone can help or make suggestions but basically I have 13k on 2 cards MBNA and Halifax @ 26%, I have been reading re using your savings to pay this off and am a bit torn as I have 6.5k in an isa which would pay out 30k in 7 years time for my Daughters 18 and 1.5k in cash savings Whilst this would make a big dent in the cards I have been trying to get a 0% balance transfer to Bcard but have been turned down even though I thought I had good credit, Having just paid off a 10k Loan and clearing both credit cards before. I would be interested in anyones suggestions as I have 500 per month disposable to pay any Credit cards or loans?????!!!!

Experian_company_representative

Other lenders will not know that it is a sub-prime card so keep it open if you might use it again. If you're not going to use it you should either close the account or ask for a low credit limit.

James Jones

RedSoleShoes

neal_credit_card wrote: »

Hi not sure if anyone can help or make suggestions but basically I have 13k on 2 cards MBNA and Halifax @ 26%, I have been reading re using your savings to pay this off and am a bit torn as I have 6.5k in an isa which would pay out 30k in 7 years time for my Daughters 18 and 1.5k in cash savings Whilst this would make a big dent in the cards I have been trying to get a 0% balance transfer to Bcard but have been turned down even though I thought I had good credit, Having just paid off a 10k Loan and clearing both credit cards before. I would be interested in anyones suggestions as I have 500 per month disposable to pay any Credit cards or loans?????!!!!

Can't advise on whether to use your ISA or not but when it comes to credit cards, you are probably better with one of the long-term low rate balance transfer cards rather than trying to get a 0% one (unless you were planning to pay off £13K in the 0% time limit). However, even if you got a 0% card, it is highly unlikely to have a credit limit high enough for £13k. Even the low rate bt card would be unlikely to have this limit. You probably need 2-3 cards.

I have found that with lots of card lenders, they don't care much for your good credit history as they want you to build a 'relationship' with them before they will give you the credit limit you are looking for.

Your other option obviously is a loan, which should be a better interest rate.

neal_credit_card

Hi,

Have just spoken to Halifax and they have rate Jacked the % to 29.9 I have spoken to them about a loan over 3 Years and they have quoted 29.9% over 1 Years for 7.5k 27.3% over 3 years... What a joke the last Loan I had with them was paid in October and the rate was 7.9%.!!!!!!

Why are good payers being penalised for the countrys debt problems?????

firsttimestudent

I believe other lenders would not be able to tell if you have the subprime Classic Card, or the excellent-credit World Mastercard do they? (Of course the limit may be a hint, but nothing further than that?)

izools

firsttimestudent wrote: »

I believe other lenders would not be able to tell if you have the subprime Classic Card, or the excellent-credit World Mastercard do they? (Of course the limit may be a hint, but nothing further than that?)

As star-fire pointed out, any time a creditor does a credit search on you they don't even see the name of the creditor on your accounts, let alone whether it is sub prime.