Cancelling a card to improve credit

Money1

Hi guys,

Long time lurker, first time poster.

Just looking for opinions on whether to cancel a credit card or not, I tend to get conflicting answers when I’ve done my own research, so thought I’d ask you guys.

Bit of info about my credit in case anyone cares... No missed payments in 4 years and recently taken out an unsecured loan at 4.9% so seems fine.

Other credit:
Current account with a £500 overdraft, which I haven’t had to use in over a year. Just there for emergency reasons.
Tesco Credit Card: £0/£1500 – Just tend to use this to fill up my petrol once a month to keep it open. Direct debit set to pay maximum.
Barclaycard: £0/£3300 – Have a Netflix subscription and brother’s xbox live membership on this (again just to keep it open). Roughly £12 p/m which again is paid in full.
First Direct Card: £1300/£2500 – 0% on this for another 18 months or so. Pay the minimum but usually overpay £100-£200 per month depending on bonus.

Anyway, I’ve been considering cancelling my Tesco credit card for a while, it just takes up space in my wallet and seems a bit unnecessary.

I’ve heard conflicting things though when I’ve had a look into whether to cancel it or not.
1. To cancel all cards you don’t use, as this shows the full debt you could potentially get in. Apparently a lender will take your limits into account (in a negative way) when deciding whether to give you a loan/mortgage etc. So although I’m only in £1300 worth of card debt at the moment, I could potentially get into £7000+.
2. To keep open credit cards (within reason). This gives a low balance/limit ratio so shows you have access to the credit but it’s not needed or relied on. So having a total balance/limit of £1300/£7300 is more favourable than £1300/£2500.

Which is right or wrong? Or are they both valid points? Is one more favourable than the other? Any other more important reasons for and against?

Sorry if this has been asked before, I couldn’t find much info using the forum search.

Cheers

[Deleted User]

I think it's marginal, in your case. Cancellling the Tesco one will still leave you with a decent headroom about your current balance.

On the flip side, leaving it open doesn't give you a huge total limit (unless your income is very low, eg 10k or so).

Personally I'd probably keep it as a back up, unless you were thinking about specifically applying for more credit.