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Cancel a credit card before getting a mortgage?
flergalwit
Posts: 71 Forumite
(Wasn't sure whether to post this here or in the credit card forum...)
I have a Halifax credit card with £6,700 credit on it, which I don't use any more. In the next 6 months I'm likely to try and get a mortgage of £50-100k. Should I cancel the card? My family says I should keep it as it shows I can already get credit, and have no trouble paying it off on time. The page http://www.moneysavingexpert.com/credit-cards/cancel-unused-cards doesn't give a definitive answer but suggests perhaps it's worth keeping in order to keep my "credit utilisation ratio" low. (I'm pretty sure it would be above 25% if I were to cancel.) But otherwise I should cancel. Any thoughts on this?
Another point. Currently I'm £100 overdrawn on my Natwest account and £250 overdrawn on First Direct as you can do this without being charged. Should I clear these, for the sake of my mortgage? Or is it too late to do anything about this anyway given I will probably be applying within 6 months?
I have a Halifax credit card with £6,700 credit on it, which I don't use any more. In the next 6 months I'm likely to try and get a mortgage of £50-100k. Should I cancel the card? My family says I should keep it as it shows I can already get credit, and have no trouble paying it off on time. The page http://www.moneysavingexpert.com/credit-cards/cancel-unused-cards doesn't give a definitive answer but suggests perhaps it's worth keeping in order to keep my "credit utilisation ratio" low. (I'm pretty sure it would be above 25% if I were to cancel.) But otherwise I should cancel. Any thoughts on this?
Another point. Currently I'm £100 overdrawn on my Natwest account and £250 overdrawn on First Direct as you can do this without being charged. Should I clear these, for the sake of my mortgage? Or is it too late to do anything about this anyway given I will probably be applying within 6 months?
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Comments
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No harm in cancelling unused credit facilities. Likewise best to clear your overdrafts. The tidier your credit profile the better.0
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Personally speaking I would keep the card. I have heard that you would find it difficult to obtain a new one with a relatively short length of time at your new address, and given you don't use it I wouldn't have thought its a huge problem for a lender. Perhaps if you were a borderline case for their criteria it might impact it.
As to the overdrafts I would personally be tempted to clear them - the lender will see them from your credit file anyway, but on a personal level I just wouldn't do it, even if you can do it without incurring fees - especially when its only £350 and its not like savings rates are going to make it particularly profitable.0 -
Unless applying to a Yorkshire Building Society group member, there is no benefit derived in cancelling a nil balance credit card.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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We cancelled all unused credit cards. But then we were applying to YBS.0
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Which so far appears to be the only lender group (YBS, CBS, N&P BS & Accord) which has a problem with unused credit, AFAIK.We cancelled all unused credit cards. But then we were applying to YBS.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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