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How many credit cards is bad for your rating?
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mattih5
Posts: 204 Forumite
Hi,
I've not posted on here for a while but thought this might be a worthy question. I'm sure it gets asked over and over again but based on everything I've read I haven't found the answer I'm looking for.
Basically I always apply and get accepted for 0% purchase cards. I now have 5 credit cards, one with M&S that I've had for 5 or 6 years, Amex for a similar amount of time, Halifax two years, MBNA Fluid 9 month and Tesco about 5 month.
What I'm curious about is will having this amount of cards be detrimental to my credit rating if I keep them open and apply for another in say a years time?
The total credit across them all comes to around £18k. I have in the passed trimmed the credit limits of the Amex from £5k and the &more from £6k down to £1k each.
I understand the principle of credit card utilisation of which mine is around the 40 to 50% mark.
The balance on the M&S, Amex and Halifax is always very small, maybe a combined value of £150 a month as I try to put all my purchases on the Tesco as it is 18 month 0% purchases (I stash the cash and pay off at the end). Therefore, the Fluid is probably about 90% maxed out (again stashed away) and the Tesco is 50% utilised.
When the 0% deal on the Fluid and Tesco cards ends I would seek to get another 0% card (first settling the balance on those cards) but this leaves me with 5 credit cards of which I will find it difficult to use individually. But my credit utilisation will be fairly low.
What's the general practice when this occurs? I've read in many places that it is bad to close credit accounts due to the utilisation figure but it is also bad to keep them open and not use them or to simply have that much credit available.
Prior to this I have written to credit companies to close cards but I stopped as I'd read that in principle this was seen as a negative action.
I've not posted on here for a while but thought this might be a worthy question. I'm sure it gets asked over and over again but based on everything I've read I haven't found the answer I'm looking for.
Basically I always apply and get accepted for 0% purchase cards. I now have 5 credit cards, one with M&S that I've had for 5 or 6 years, Amex for a similar amount of time, Halifax two years, MBNA Fluid 9 month and Tesco about 5 month.
What I'm curious about is will having this amount of cards be detrimental to my credit rating if I keep them open and apply for another in say a years time?
The total credit across them all comes to around £18k. I have in the passed trimmed the credit limits of the Amex from £5k and the &more from £6k down to £1k each.
I understand the principle of credit card utilisation of which mine is around the 40 to 50% mark.
The balance on the M&S, Amex and Halifax is always very small, maybe a combined value of £150 a month as I try to put all my purchases on the Tesco as it is 18 month 0% purchases (I stash the cash and pay off at the end). Therefore, the Fluid is probably about 90% maxed out (again stashed away) and the Tesco is 50% utilised.
When the 0% deal on the Fluid and Tesco cards ends I would seek to get another 0% card (first settling the balance on those cards) but this leaves me with 5 credit cards of which I will find it difficult to use individually. But my credit utilisation will be fairly low.
What's the general practice when this occurs? I've read in many places that it is bad to close credit accounts due to the utilisation figure but it is also bad to keep them open and not use them or to simply have that much credit available.
Prior to this I have written to credit companies to close cards but I stopped as I'd read that in principle this was seen as a negative action.
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Comments
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We have more than a few cards, as I will only ever use interest free ones, and preferably Cashback as well. So, when one is no longer interest free, I apply for a different one that is.
We don't owe much on them all though, as we pay them up when interest would be payable, but I never really get around to formally cancelling them. I just shred them.
We have never been rejected for a card or any loan, and we live well within our income, so perhaps it's more about how reliably you pay them, rather than amount of cards or credit available?
Our available credit, on cards, is about 3-4 times our yearly income, but we only ever really owe a little.
I would imagine that, if we starting spending up to limits, it might impact on future applications.
Lin
You can tell a lot about a woman by her hands..........for instance, if they are placed around your throat, she's probably slightly upset.
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Every lender has different criteria. One lender might see you have 5 cards, and decide you don't need another one. Another lender might see you have 5 cards, and think hey, we can profit from you, here's another card.
In regards to limits, once again one lender might see you already have high credit limits, and only give you a small amount or no card at all. Whereas another lender might take your average credit limit and give you that.
In short, there's no single answer. So long as you're paying it off in full every month (bar the 0% cards), I can't see you having any problems with the amount of cards you have.Credit 'Score' - Don't buy the credit 'score' that Experian, Equifax and Noddle want to sell you. It's an arbitrary number that means nothing when it comes to applying for credit.
ALWAYS HAVE A DIRECT DEBIT SET UP FOR THE MINIMUM PAYMENT ON YOUR CREDIT CARDS, REGARDLESS OF WHETHER YOU PLAN TO LOGIN AND PAY EACH MONTH.0 -
ALWAYS HAVE A DIRECT DEBIT SET UP FOR THE MINIMUM PAYMENT ON YOUR CREDIT CARDS, REGARDLESS OF WHETHER YOU PLAN TO LOGIN AND PAY EACH MONTH. unqote
I just wish others would take your advice.0 -
We don't pay by DD - we have a money programme, for dates, and just pay them all, online, a week before they are due.
Lin You can tell a lot about a woman by her hands..........for instance, if they are placed around your throat, she's probably slightly upset.0 -
The banks can have what opinion they like - due to the pitiful amount of interest they pay on my investments, I avoid actually giving them money to use their cards!.
I use cards for convenience, not necessity, but as I said, despite all my cards, and them never getting any interest, and them paying Cashback on some, I have never been rejected, and they seem quite cheerful about me being a customer.
Perhaps it's also relevant that my income is pensions etc., so they don't worry about me losing my job and struggling.
If I needed credit, it might matter to me what banks think, but I don't, so it doesn't.
Lin You can tell a lot about a woman by her hands..........for instance, if they are placed around your throat, she's probably slightly upset.0
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