Help - Credit Advice / Rating

domjkb10

Hello,

Hoping for some advice on what is best for my credit rating.

A couple of years ago I had an enormous debt level of about 27,000. Luckily I was able to pay off approximately 20K of it.

Currently I have 5 credit cards which are all up to their limits. I have held all of these cards for more than 3 years. These range from a awful Vanquis card! to a natwest platinum credit card.

I am in a position to pay off half of the debt I have left, so my questions is;

I will obviously pay off the most expensive cards first - Should I close these accounts? Or is it best to have some available credit on my credit profile? (There seems to be mixed views on this)

I am hoping to give me credit score a bump. (As I am showing a few points below average, however I have just moved house which I have read can make a difference?)

samtoby

Hi,

Don't take any notice of what the site says. At the end of the day a score is just a number. I would close the credit card with the highest APR after it is paid off and then keep the one with the lowest. If they have good limits what is the point in having credit you do not use.

I have been recently been declined for something and the reason was I had too much available credit based on what I earn.

If you have say 20k available credit and you earn that - if you maxed it how would you pay it off?

samtoby

Make sure you are on the Electoral register if you have just moved - that will be vital for new credit.

Tixy

What cards will you be able to pay off in full? any prime cards as well as vanquis? if so then it may be worth keeping them open in the hope that they may offer you an existing customer balance transfer deal which may help with the remaining debt.

domjkb10 wrote: »

Or is it best to have some available credit on my credit profile? (There seems to be mixed views on this)

There are mixed views on this because its a bit of a balancing act. You ideally don't want to look like you are using all your available credit - as you might appear to potential lenders as maxed out, posters often suggest ideally to keep below 50% utilisation of your available credit.
Equally some potential lenders would look as lots of available but unused credit as a negative, in that some will factor the whole limits in to any affordability calculations.

domjkb10 wrote: »

I am hoping to give me credit score a bump. (As I am showing a few points below average, however I have just moved house which I have read can make a difference?)

If you currently have £7k of debt and are going to reduce that to around £3.5k of debt then that should very likely increase your chance of being accepted for new credit.
When moving house this can cause a short term issue with obtaining new credit. Getting on the electoral roll and waiting for this to update with the credit reference agencies will make a big difference to your ability to get credit.

domjkb10

Thank you samtoby and Tixy for your very helpful comments.

Yes it has been a very long battle with debt but I feel I am finally getting somewhere. By some miracle my credit file is not badly damaged! (2 late payments in the last 18 months, and one agreement to pay back in 2005) I am just paranoid about the right things to do now when it comes to playing the credit game.

I will certainly pay off cards from High - Low APR. That goes without saying (even for me!)

Like you say Tixy, I wondered whether looking like you have no available credit all the time was a bad thing? I would also like to be accepted for a new balance transfer card soon to help clear the rest..

Would you say the best way forward is to always leave myself access to a thousand or two? I could obviously cancel these if / when I obtain a new balance transfer card...

Many Thanks