to many credit cards give bad credit rating?

the_reallongshanks

hi , i now have so many credit cards (all with balances paid off) that i think i should cancel most of them, i only use my tesco credit card as i collect the points. i open other cards when there are good opening offers. how do i go about cancelling them all?

poppy_f1

call up the card companies and ask them to be cancelled and ask for a letter confirming it has been done

the_reallongshanks

just done one, 4 to go

BONJOEY

dont close them all, that can have a bad effect on your credit rating, you wil proberly find you will be rejected for cards in the future,

jonesMUFCforever

Bonjoey how can that be?
If you have a load of unused cards the credit agencies will show that you have a lot of unsecured debt (limits on the cards) available to you and that is more likely to be a problem in you getting new cards in the future.

Fahim_2

Close one account, wait for a month or two to show up on the credit report and then close another time. If your available credit goes down by a large, it will affect credit rating.

Clariman

There is a lot of incorrect information on this thread. The short answer is that it is a good thing to close down unused credit cards because it (a) improves your credit rating (but see note below) and (b) means you are less exposed to potential identity fraud.

Note
Two of the main things that lenders look at when deciding whether to lend to you or not are:

(i) The amount of available credit you have and
(ii) the percentage of your available credit that you have used up.

So you can see that closing down a credit card will improve (i) but may make (ii) worse. This is what leads to lots of confusion and lots of misinformation. Having spoken directly to Experian about this (on behalf of the stoozing website) and also an industry insider, I have no doubt that the benefits of (i) outweigh the disadvantages of (ii). If the OP wants to hedge his/her bets then you could close all cards except one. This would dramatically reduce the amount of available credit but would still ensure that the amount of used credit wasn't anywhere near 100%. Personally, I'd probably just close all unused cards particularly if the day to day purchase card already has some unused credit.

You can find a detailed rate-tarts (and stoozers) guide to credit scoring here.

Clariman

lisyloo

There are a number of other disadvantages to keeping unsused cards as follows

1) Fraud - potentially unnoticed fraud as you are not frequently checking unused accounts.
2) Changes in Ts& Cs (e.g. low usuage fees brought in that you don't notice).
3) Lots of your personal info out in the world that could get into the wrong hands e.g. bank has a laptop stolen.
4) Lots to keep track of /report if you suffer a burglary.

Too much potential hassle IMO.
I now have only one and will stick with that unless there is any good reason not to.