credit card query

blinx

Apologies if this has been answered elsewhere on this forum but basically I would like to know this... if you have a credit card you no longer use (which I have), is it better to close the account down? As I seem to recall reading somewhere that it can make an impact on your credit report, but I'm not sure if that is correct and if it is why would it make an impact? (its just I'm thinking of applying for another one with 0% interest on the introductory offer & wondered if having the 'dormant' one (that is currently open but inactive i.e., I no longer use it) showing on my account would affect the decision of future cards I apply for. I hope that makes sense and any info/advice would be hugely appreciated.

blinx

Drat I think I might have put this in the wrong area, :eek: - I have no idea how to move it.. Grrr... not sure if anyone else can do it for me, by which I mean Admin. HUGE apologies if its in the wrong area.

zerog

Closing accounts reduces your total available credit (good for new apps) but may increase your proportion of credit used (bad).

blinx

Oh I see zerog, never thought of it like that! So I probably should just close the credit card as I'm really not using it.

rartherinv

It is alleged by some that closing your oldest account can negatively affect your credit worthiness (ever so slightly) in the eyes of lenders who use the age of credit accounts to ascertain the longevity of your financial stability.

In Equifax's own credit scoring system (large pinch of salt advised), they have a category where they pull out the oldest active account from your report and grade it based on how old it is, saying "credit grantors prefer to see accounts opened at least 36 months" and "Active accounts are preferred to settled accounts".

If you have other old credit accounts you may as well close the unwanted account. However if you do not have older accounts you may want to just lower the credit limit on the dormant account so then you are perceived as having longevity and also not at risk of being seen to have too much credit available.