When to close credit card accounts?

TheGenerus1

I have just obtained a new credit card with 0% on balance transfers (Flybe).

I have 4 other credit cards (all subprime) which I have transferred the balance to the new card.

Does anybody know what the implications would be if I closed all the 4 credit accounts down in one go.

I know the credit balance to limit ratio will have to be taken into account if I close these accounts down.

If for argument sake, the new card now has about 50% utilisation after the balances where transferred, would it be ok to close all the other accounts in one go? or should I close a couple down now and then the other two a couple of months later?

My aim is to just to have the one card active on my reports with the target of obtaining a high end mainstream card down the line (low APR and large limit).

What I'm really trying to get the answer for is what is the best way to handle these closures for the least impact on my credit report.

How does it look to potential lenders that credit cards have been closed? is it viewed negatively or is it seen in a positive light? (assuming the credit cards that have been closed have been handled correctly and have been held for over 2 years).

Many thanks

P.S Does closing catalogue accounts have the same impact as closing credit card accounts?

I have a couple of catalogues that I want to close with £3500 limit on each (£0 balance). Should I close them at the same time as the credit card accounts?

lisyloo

How does it look to potential lenders that credit cards have been closed? is it viewed negatively or is it seen in a positive light?

Neither. It's how you've managed the credit that counts and that will stay there for 6 years from closure.

I think it's neutral.

You also can't second guess how lenders will interpret your report. We can only give rough guidelines of what's good/bad.

Personally I feel every open account is a fraud and id theft risk, so I do not have any accounts I'm not using.

TheGenerus1

lisyloo wrote: »

Neither. It's how you've managed the credit that counts and that will stay there for 6 years from closure.

I think it's neutral.

If this is the case, then I think I keep them open for a few more months in order to get those green ticks.

I thought that when you close down a credit account (from an active status to a settled status) you get a small negative hit to your credit report in terms of potential lenders more liking to see lots of active accounts on reports. Couple this with me wanting to close down 4 at the same time, you can see why I need advice on how to act with regard to the 4 accounts that I no longer need.

BugsyBrowne

TheGenerus1 wrote: »

If this is the case, then I think I keep them open for a few more months in order to get those green ticks.

I thought that when you close down a credit account (from an active status to a settled status) you get a small negative hit to your credit report in terms of potential lenders more liking to see lots of active accounts on reports. Couple this with me wanting to close down 4 at the same time, you can see why I need advice on how to act with regard to the 4 accounts that I no longer need.

Depends what the balance is on your active accounts,obviously someone earning 25k and having a 15k balance on an active account will look negative where is if it's closed it will look positive.

lisyloo

I thought that when you close down a credit account (from an active status to a settled status) you get a small negative hit to your credit report in terms of potential lenders more liking to see lots of active accounts on reports.

It really isn't as straightforward as that I'm afraid.
a) It depends on how may accounts you had left.
b) Possibly how long they had been opened.
c) how the % of credit being used changes. For example if you were only using 20% of your available credit and then closed accounts and went up to 90%, then you'd look maxed out and that would be negative.

I don't think you can say that closing is either negative or positive on it's own.
More context about the situation is required.
The above are only examples and not an exhaustive list, there may well be other factors as well.

ukclare

Would it be worth spending a little amount on a couple of the cards each month and paying it off on time (say for petrol) - wouldn't this add this more to your positive credit score even than closing them?

lolarentt

Why not drop the 4 one-by-one, over a period to lessen any appearance of major changes to your situation

dazza.mk

ukclare wrote: »

Would it be worth spending a little amount on a couple of the cards each month and paying it off on time (say for petrol) - wouldn't this add this more to your positive credit score even than closing them?

Wouldn't necessarily add a great deal, except if you leave them dormant they will eventually show as dormant on your credit report so will contribute less to a history of managing your credit well.

themull1

I would close them all now.

chanz4

I would close 1 every 3 months, but cut it up!

TheGenerus1

BugsyBrowne wrote: »

Depends what the balance is on your active accounts,obviously someone earning 25k and having a 15k balance on an active account will look negative where is if it's closed it will look positive.

My Salary is circa £25,000. The Balance across the 4 cards are £0 at the moment (due to the BT to the Flybe). The total available credit is £4500 (circa 18% income to credit ratio).

My Flybe card card now has £1300 balance on it (BT from the 4 cards) with a limit of £2300 (circa 60% utilisation).

I also have 2 catalogue accounts with £0 balance but with £3500 limit on each. I do not know how this impacts overall credit. If mail order accounts are taken into account then I have overall access to £11,500 (circa 45% income to credit ratio).

This is why I want to close all my other accounts except the Flybe card.

My income to credit ratio would then be less then 10%
My balance to available credit would be 60%.

This only active account on my report will hopefully get me a very good mainstream card with an attractive APR and limit.