Credit card with 0 balance on file

katie_saver

Hello,

Is it true that even if you have a credit card with zero balance (ie. all cleared) this will count against you on a credit search?
I would like to apply for a new credit card but am worried they won't accept me or it will affect what limit they offer me due to me having 4 credit cards of which one has no balance on it.

Thanks,

Aquamania

katie_saver wrote: »

Hello,

Is it true that even if you have a credit card with zero balance (ie. all cleared) this will count against you on a credit search?
I would like to apply for a new credit card but am worried they won't accept me or it will affect what limit they offer me due to me having 4 credit cards of which one has no balance on it.

Thanks,

It's never affected me. And as I always pay off credit cards in full every month, then even the cards I regularly use will have no outstanding debt according to the CRAs.

The only downside I foresee is that cards have a credit possibility, and lenders are increasing looking at current lines of credit available to an individual, and comparing that to their annual income, to assess ability to repay.

eskbanker

Depends what you mean by counting against you - it will contribute to the amount of credit you have available to you so that's potentially a negative, but the fact that it's a zero balance lowers your borrowing to limit ratio, which is positive. However, with three other cards on the go, why not close the empty one before opening a new one?

katie_saver

Thanks. That's exactly what I have been planning to do - close empty card then apply for new one to maximise my chances of getting a higher limit.

Anthorn

It all depends on the lender and there are many different ones. For example where a lender relates balances to income a nil balance is in your favour. But where a lender is looking to make a profit from a balance it can count against you. Certainly, Noddle views a nil balance with suspicion: Today a nil balance appeared on my Vanquis account and Noddle took my rating down from 4/5 to 2/5. Certain because that was the only change on the accounts. But then who cares about CRA ratings and scores?

If you close an account you are also deleting part of your credit history when (if) that account is removed from CRA reporting and disappears from your credit file.

It's worth noting for comparison that those who pay off the whole balance every month could have a whole history of nil balances depending on the date of payment compared with the date the lender reports to the CRA. That is offset to some extent by the payment history.

thebritishbloke

Anthorn wrote: »

It's worth noting for comparison that those who pay off the whole balance every month could have a whole history of nil balances depending on the date of payment compared with the date the lender reports to the CRA. That is offset to some extent by the payment history.

That's not how it works. It shows your statement balance and your payment for every month. They do show how much you borrowed and how much you paid, regardless of if you paid it off in full.

Anthorn

thebritishbloke wrote: »

That's not how it works. It shows your statement balance and your payment for every month. They do show how much you borrowed and how much you paid, regardless of if you paid it off in full.

Did you miss this?

That is offset to some extent by the payment history.

Otherwise you just repeated what I posted. The fact remains however that some people, not all, will have a history of nil balances. As I already posted, it all depends on when they make their payment related to the date the lender reports to the CRA.