Closing off credit cards

iNVADER84

Hi there,

I'm looking to go ahead with finance on a new car shortly and I always get a bit nervous when going ahead with it.

I have only 1 credit card and a small loan active at the moment but I do have 3 credit cards which are empty still open. Is it worth me cancelling them off?

Does is affect my chances in any way?

YorkshireBoy

iNVADER84 wrote: »

Does is affect my chances in any way?

Depends on your income, debt to income, and available credit to income...none of which you've provided so impossible to say.

Even if you did close them down, you may have to wait 2-3 months for their settled status to be recorded with the credit reference agencies...but you want the finance "shortly"?

Better_Off_1983

When I paid all mine off and became debt free, I closed my credit cards off. I no longer had a reason or use for them to still be open.

izools

If the total credit limits across all of your cards add up to significantly more than about 50% of your annual income then you'd benefit from closing one or more down, yes.

If however your current "in use" credit card has a balance over 50% of it's limit, you'll want to leave at least one of the others open so that your "overall" debt to limit ratio isn't too high - having total credit card balances equating to more than half your total credit card limits is often interpreted as a sign of debt stress reducing your credit worthiness.

If you're happy to provide the information, letting us know the limits and balances on each card as well as your gross annual income will allow us to give more accurate advice, as would knowing what the monthly payments are on your existing loan.

TheGenerus1

izools wrote: »

If the total credit limits across all of your cards add up to significantly more than about 50% of your annual income then you'd benefit from closing one or more down, yes.

If someone also has catalogue accounts, should this be factored into total credit limits? or do lenders tend to exclude mail order account limits into their calculations as I fear it maybe seen as not so important as credit card limits.

iNVADER84

izools wrote: »

If the total credit limits across all of your cards add up to significantly more than about 50% of your annual income then you'd benefit from closing one or more down, yes.

If however your current "in use" credit card has a balance over 50% of it's limit, you'll want to leave at least one of the others open so that your "overall" debt to limit ratio isn't too high - having total credit card balances equating to more than half your total credit card limits is often interpreted as a sign of debt stress reducing your credit worthiness.

If you're happy to provide the information, letting us know the limits and balances on each card as well as your gross annual income will allow us to give more accurate advice, as would knowing what the monthly payments are on your existing loan.

I have about £2.5k on my £5k limit on my Barclaycard and a £0 balance on my £800 limit Lloyds TSB card so I guess I'll keep the Lloyds one for now.

My loan is £160 a month and I earn £34,500 a year before Tax.

Hope it helps.