Store cards and your credit rating...

brennan247

Hi All,

I am looking to take out a mortgage in the next 12 months and am trying to get myself in the strongest financial position possible.

I already have a credit card that I use for transactions during the month and pay off in full when I receive my bill. I do this to show that I can make credit purchases and then pay them back, thus showing the bank that I am a low-risk borrower and can be trusted with a reasonably large amount of credit.

I also have an old store card that I want to pay off and get rid of (preferably today) and just wondered if it would be more beneficial for my credit rating if I left the account open sitting at zero (I don't intend to ever use it again) or close it completely, just leaving my credit card, mobile phone-bill and current account open on my credit file.

Because it is a store card and therefore only has a fairly low (£400) limit I am aware that, even sitting at zero, this can have a negative impact on my credit rating, as in the eyes of the bank, an institution is only 'trusting' me with £400, instead of the £3200 my bank trust me with on my credit card.

I would appreciate some advice, preferably from somebody who knows the answer rather than a guess, as you can understand I cannot afford to ruin my good credit rating this close to applying for a mortgage!

Thanks,

Phil

bengalknights

Id say close the store card as it will be of no use to your credit in the same way a credit card would be, do bear in mind though that your income/debt ratio would decrease which could have a negative effect.

brennan247

It looks like there's reasons for keeping it and reasons against keeping it. I guess it's just balancing up what is the best option. Surely having outstanding credit isn't a good thing? Is it not better just to have a credit card that I say spend £300 a month on and then pay off?

chanz4

Any form of credit borrowed and paid back is good, if you have large balances for a while it does show finiancial weekness. I would keep the storecard been honest.