Credit rebuilding - how many cards?

matttye

Would appreciate some opinions on this.

Does it matter how many cards you have if total debt to salary ratio is low? I have two 'bad credit' credit cards which I pay/will pay in full every month (had one for three months and only just got the second one). The sole purpose of the cards is to help repair my damaged history...

I'm not sure whether getting more cards would have a more or less positive effect on my credit file. My total available credit is less than 5% of my salary, so no danger of borrowing too much if I get another, but just wondering whether it would actually benefit me.

Have two 4 1/2 year old defaults and no adverse information since, but several settled phone contracts with no missed payments.

Bear in mind I'm not planning on making any more applications for a while; just wondering whether more cards would assist.

I have a phone contract, two current accounts and two credit cards.

Will be wanting a mortgage once I've saved a deposit up - unlikely to be before the defaults have dropped off.

Equifax says "That means that devising a strategy to open and pay off as many different kinds of accounts as you can is better than adding more debt to an existing credit card." but I'm not sure how accurate that is!

http://www.equifax.co.uk/Products/learning-centre/rebuilding_damaged_credit.html

Thanks!

Trajal

I don't think it hurts, I have had 3 low score credit cards in the past. Two of them repeatedly raised my credit limit and had combined limits of £6,000 when I closed them and went to mainstream(ish) credit.

Capital One didn't ever raise my limit from £200, oddly enough, a relatively useless amount that I only used for petrol and paid off every month.

izools

What you have already is fine. Continuing to run your two credit cards well paying them off in full each month will build a very nice picture for a mortgage underwriter. Adding more accounts in to the mix could have more of a detrimental effect - not because of how many accounts you'd have; but because it would reduce the average age of your accounts - which is a negative factor.

matttye

izools wrote: »

What you have already is fine. Continuing to run your two credit cards well paying them off in full each month will build a very nice picture for a mortgage underwriter. Adding more accounts in to the mix could have more of a detrimental effect - not because of how many accounts you'd have; but because it would reduce the average age of your accounts - which is a negative factor.

It's probably better if I hold off on applying for anything else for quite a while then, as I've opened a Santander 123 account and two credit cards in the last 4 or so months. My other account is about 5-6 years old.

Thanks!

The_Boss

My opinion is that the more data on your report showing good account management the better. So having a couple of cards builds data up faster than having just one.

Lenders will still want to see good account management over time though.

Thrugelmir

The question for any lender is why the requirement for multiple cards and more credit facility available.

One card with an adequate limit should be sufficient for most people. Borrowing on credit cards is an expensive option. Higher value purchaes are better made with a loan for the purpose. Repayment of the loan will amply demonstrate good personal financial management.

matttye

Thrugelmir wrote: »

The question for any lender is why the requirement for multiple cards and more credit facility available.

One card with an adequate limit should be sufficient for most people. Borrowing on credit cards is an expensive option. Higher value purchaes are better made with a loan for the purpose. Repayment of the loan will amply demonstrate good personal financial management.

Both of my limits are really low - £500 and £250. I'm not going to take out a loan because it will cost me more in interest, which I'm paying none of now with my cards as I always pay on time.

I don't *need* any credit whatsoever at the moment. I'm purely trying to set myself up for a mortgage application in a couple of years' time.

Thanks