Loan (Credit Rating?)

monkeysundae

Hi Martin/All,

I've recently improved by Credit rating over 6months from Fair to bordering Excellent thankfully using this site and Experian, in that time I've managed to pay off a credit card in full with some help which was pushing the sum of £5000! I'm now looking to acquire a loan for a new car/home improvements and wanted to know if I should cancel the card as I will no longer be using it, or would keeping the account (no balance though limit of £5000) open help my credit rating???

Your help would be much appreciated

Best Regards

Hazzinho

With the card paid off I can't see it being a problem getting a loan as long as you are on the electoral roll and earn over £10k a year.

rachelonna

If you have no other credit cards, keep that one as long as it's not from a company you will want to borrow from again in the future as they have good deals, for example, Virgin or arguably Barclaycard.

Banks like to see that you're able to manage credit, so having a card which is not used shows self control and may help your case in the future.

This said, maybe it's possible for you to actually borrow on the credit card to pay for the car/home improvement instead of a loan? Virgin card will give you money to your bank account at 4% which is likely to be cheaper than a loan

Tixy

Without knowing more about your finances and situation its impossible to guess whether keeping open the card or closing it would make it most likely you would be accepted for a loan.

It would depend on whether you had any other credit accounts on your file, how much you want to borrow, how much you earn, whether you have any debts amongst other things.

Hazzinho wrote: »

With the card paid off I can't see it being a problem getting a loan as long as you are on the electoral roll and earn over £10k a year.

Why £10k a year? The OP hasn't said how much he wants to borrow on his loan. What if he wants to borrow £15k? If that was the case its very unlikely he'd get a loan even if he was on the e/r and earning over £10k. What if he still owes £10k in other debts aside from this paid off credit card?

rachelonna wrote: »

This said, maybe it's possible for you to actually borrow on the credit card to pay for the car/home improvement instead of a loan? Virgin card will give you money to your bank account at 4% which is likely to be cheaper than a loan

Could be cheaper than a loan if you can repay the debt fairly quickly (probably in less than 2years).