Close Accounts of leave with zero balance?

steveg001

Hi everyone,

I'm not sure where to post this so I'll put it in a couple of places.
I've got over £10,000 credit card debt, but am in the lucky position of being able to pay all of this off in one lump sum.
As a result, in the near future I am looking to apply for a mortgage and obviously need my credit rating to be as good as possible, so my question relates to the credit cards.
When the debt has been cleared and this clearance reaches through to my credit report, should I close the credit card accounts, which is what I want to do eventually anyway, or should I just leave them with £0.00 balance?
I just wondered if it would harm my credit report to close the accounts?
Thanks in advance.

lisyloo

should I close the credit card accounts, which is what I want to do eventually anyway, or should I just leave them with £0.00 balance?

From a credit history point of view it makes little difference as the history stays there for 6 years after closure.

I just wondered if it would harm my credit report to close the accounts?

It can be harmful to have too much available credit.
The downsides are also
1) No access to "new customer" deals
2) Chance of id theft for every computer system your details are on.
3) Chance of fraud and not noticing especially if not checking statements.
4) Chance of annual fees or dormancy fees being introduced and not noticing.

Against that you have t balance keeping lines of credit open because you cannot guarantee being able to get credit in future especially if you fall on hard times.

Personally I am in favour of closing accounts, but there is a bit of a trade-off and it does depends on the situation.

For getting a mortgage, the amount of unsecured credit you have is not that important (it's more crucial if you are asking for more unsecured credit).

So I'd say it's not really that pivotal for the mortgage as the good payment history remains anyway.

CLAPTON

how many credit card ?
what are their individual limits ?

do you trust yourself to use CC sensibly?

are you ever going to want section 75 protection

are you ever going to want to hire a car (especially abroad)?

are you ever going to want to book a hotel room?

a CC, properly used, is an excellent way of enhancing/maintaining a credit rating

bigadaj

Keep between one and at most three credit cards, and have available credit in these totalling no more than half your salary.

themull1

I would close all but one. If you have too much available credit it might affect your mortgage application.

gener8or

themull1 wrote: »

I would close all but one. If you have too much available credit it might affect your mortgage application.

agree close them down

PHickman

Maintaining and using cc's is a fantastic way to ensure you have a stellar credit rating. Once you have paid it off in full I would keep them all open. Ensure you spend something on them each month and pay them off in full... this ensures you are getting +1 marks each month (and you will need your rating to be high for when the brokers/agents/lenders leave footprints all over your credit file when searching... too many footprints automatically leads to a -1!).

2 months before you start applying for a mortgage close the cc's but leave one open so you have availability to some emergency cash.

A higher rating ensures you are offered a better rate (possibly even the advertised headline rate) rather than the default average-not-so-good rate.

steveg001

Thanks for the advice everyone. I have three cards and had intended on keeping one open, just in case, but from what some say it may be better to use that one for say grocery shopping each month and pay it off in full each month.
Thanks again, very informative.