Closing Unused Credit Card Accounts

The_Boss

lisyloo wrote: »

I close down cards

Less chance of fraud
Less chance of id theft
Lower available credit (that works both ways but history stays for 6 years)
Availability of new customer deals in the future.

You need to make sure you aren't too maxxed out and have enough for emergencies, but past that I cannot see the advantage of keeping loads of cards open and any info on you out in the ether is potentially a fraud/id theft risk.

Advantages would be...

Existing customer balance transfer offers
Guaranteed credit - closing doesn't guarantee being accepted for new credit
No credit searches needed when using existing sources
Long account history on reports

The fraud angle doesn't really come into play if you check statements and contest transactions that are not yours. ID theft csn come from your mail being stolen too, but I'd rather it was delivered to my door than had to be collected from the post office every day.

lisyloo

Advantages would be...

Agreed.

The fraud angle doesn't really come into play if you check statements and contest transactions that are not yours.

Agreed, but I believe lots of people put unused cards in a drawer and don't get paper statements and don't actively check on-line. That way it can stack up without your noticing. You also might not notice your card being stolen by a toe-rag relative or cleaner. These things do happen sometimes.

ID theft csn come from your mail being stolen too, but I'd rather it was delivered to my door than had to be collected from the post office every day.

I agree with your point that we are all exposed to some risk and can't exclude risk completely. However we can make sensible decisions to reduce risk like shredding paperwork with id info and not leaving cards lying about in drawers unchecked.

I agree there are good reasons for having spare cards that you mention, but having loads lying around in a drawer that you never check are a risk, so it's about being sensible and making a sensible trade-off for your circumstances.
Personally I don't find it a very hard decision to make that trade-off but I agree there is no black & white and it depends on your circumstances.

The_Boss

lisyloo wrote: »

Agreed.

Agreed, but I believe lots of people put unused cards in a drawer and don't get paper statements and don't actively check on-line. That way it can stack up without your noticing. You also might not notice your card being stolen by a toe-rag relative or cleaner. These things do happen sometimes.

I agree with your point that we are all exposed to some risk and can't exclude risk completely. However we can make sensible decisions to reduce risk like shredding paperwork with id info and not leaving cards lying about in drawers unchecked.

I agree there are good reasons for having spare cards that you mention, but having loads lying around in a drawer that you never check are a risk, so it's about being sensible and making a sensible trade-off for your circumstances.
Personally I don't find it a very hard decision to make that trade-off but I agree there is no black & white and it depends on your circumstances.

Yeah, a happy medium needs to be struck. I'm going to wait for the OP to post up the details and then we can advise based on credit limit, length held, credit used etc.

sfax

If you close accounts and leave yourself with a debt/limit ratio of 80%+ I can see why lenders wouldn't extend more credit to you.

I would maybe close unused accounts if I wanted to reduce the total amount of available credit in order to facilitate a higher limit on a new or existing card.

I also always close 0% BT cards and then re-apply as a "new" customer a year later because the rates are so much better than any existing customer deal

JakeGreen

BugsyBrowne wrote: »

With credit scoring most of us believe the obvious ones like to much debt to income is a negative and maxed out credit cards are a negative

High debt to income ratio is bad. I'm sure we all agree on that.

What about available credit to income ratio? Any numbers for this? Can the sum of your credit limits be equal or exceed your annual income?

lisyloo

If you close accounts and leave yourself with a debt/limit ratio of 80%+ I can see why lenders wouldn't extend more credit to you.

I couldn't put a figure on it, but lenders do not want to see you "maxxed out".
If the % is too high you look like you can't manage your money or manage your debt properly. That may not be the case but lenders (or rather computers) can only work from what they see.

lisyloo

Can the sum of your credit limits be equal or exceed your annual income?

In the past some people have claimed they have "stoozed" more than their income, but that was perhaps when credit was looser.
I don't think you'll get any reliable number for this.

JakeGreen

lisyloo wrote: »

In the past some people have claimed they have "stoozed" more than their income, but that was perhaps when credit was looser.
I don't think you'll get any reliable number for this.

I was wondering if anyone could share their experiences on this? There are a few blogs and forum posts from America with people having credit lines many times greater than their annual income.

Has anyone here been refused credit for the specific reason of having too much available credit whilst having a low (below 10%) utilisation?

sfax

JakeGreen wrote: »

Has anyone here been refused credit for the specific reason of having too much available credit whilst having a low (below 10%) utilisation?

You generally won't get given a reason. I can say that I know in the past that reducing one of my credit limits from £12,000 to £6,000 meant I could get higher limit on another card. I was only at about 20% utilisation, probably £40k total at the time

lisyloo

Has anyone here been refused credit for the specific reason of having too much available credit whilst having a low (below 10%) utilisation?

You are obviously free to ask away, but I think you're asking for the moon on a stick and anyone else's information will be useless.
Lenders can change their mind from one day to the next and many people find it quite hard to get a reason for a decline.
Quite often they will say you don't fit their target profile, that doesn't mean your bad, in fact you might be too good for them, but it's impossible to get them to share this kind of commerical information which could change tomorrow even if you did get it.