4 credit cards and OD, which one to close/reduce?

tidesendtown

I have one year to improve my credit history/score - preparing in advance for remortgage May 2014 - and would like to understand how it's best to go about it.

I won't be applying for any more CCs or loans between now and then (just applied for a Tesco 0% for purchases though). I'm considering closing a CC, however I don't know which one is best to close, if any.

I've been on the electoral roll at my current address for one year and I don't have any missed payments, all is green on my credit history. However, it's all relatively new, as I moved to the UK in May 2011. All CCs were obtained in the 2nd part of 2012 and 2013.

Bank cards: 2 (one of which has a £2000 overdraft limit that I very rarely go into, perhaps once a year or so)

CCs all paid in full each month:

Halifax Clarity £2500 limit 17.9APR - used exclusively for travel
Barclaycard Platinum Simplicity 7.9APR £2000 limit
MBNA Platinum 18.9APR £6000 limit (my oldest CC obtained in 2012, highest APR, I barely use it just to keep it active)
Tesco 0% purchases for 16 months £3500 (just applied for this one as I need to purchase some stuff this year and I will pay it back in about 6 months)

I was thinking about closing the MBNA account but it's my oldest so not sure if that helps. The other choice is the Barclaycard. I could also close the Tesco one after I pay off my purchases later this year?!

Does is also help if I reduce the overdraft limit?

Thank you.

The_Boss

What is your salary?
What is this credit score you speak of that you want to improve and how do you know it needs improving?
Are you making a joint application? If so, what is their credit history like?

Initial thoughts are that a mortgage lender care more about affordability (i.e. debt held) than available credit and you will have been on the electoral roll for another year when you apply. I'll wait and hear your salary before recommending whether to close any (the MBNA is one I'd keep though).

tidesendtown

£36.5K base plus 10% bonus (not guaranteed but always got it).

Child maintenance and child benefit are not included in the above figures, they're about £7k p.a.

I thought available credit was important in any lending decision?

On credit score I don't have any idea what it is, noodle indicator says 4/5 but I'm pretty sure all the recent credit applications (4 cards in one year) affected it.

The_Boss

tidesendtown wrote: »

£36.5K base plus 10% bonus (not guaranteed but always got it).

Child maintenance and child benefit are not included in the above figures, they're about £7k p.a.

I thought available credit was important in any lending decision?

On credit score I don't have any idea what it is, noodle indicator says 4/5 but I'm pretty sure all the recent credit applications (4 cards in one year) affected it.

I wouldn't close any then.

MBNA is your longest held card, Halifax Clarity has benefits when used abroad and Tesco has a good deal. If you really want to close one then the Barclaycard will likely be best, but I'd keep it as long as possible to demonstrate stability.

The Noddle score is worthless as they are not a lender. A mortgage lender will not be as fussed about available credit (especially with your salary) as a personal loan or credit card lender. Also bear in mind that it could be a while before you can successfully obtain credit after a successful mortgage application.

tidesendtown

Thanks... I might close the Tesco card at the beginning of 2014, as I only really applied for it to get access to cash temporary at no interest.

I'm also thinking about changing my job later this year, does length of job tenure matters with the mortgage lender? Or is it irrelevant once I'm past the probation period?

danthemoneysavingman

I suggest you'd be best off talking to a mortgage broker, who can best advise you about whether you need to do anything. See Martin's article on this to help you choose wisely.
HTH

The_Boss

tidesendtown wrote: »

Thanks... I might close the Tesco card at the beginning of 2014, as I only really applied for it to get access to cash temporary at no interest.

I'm also thinking about changing my job later this year, does length of job tenure matters with the mortgage lender? Or is it irrelevant once I'm past the probation period?

Yes, job stability is also crucial. Being past the probabtion period is an absolute minimum, but again the longer the better.