Just closed inactive credit card accounts

samsam89

Hello all.

Have just closed two inactive credit card accounts that I held (1 x HSBC, 1 x Halfiax), leaving me with my one remaining partnership card that gets paid in full every month.

Myself and girlfriend have made an offer on a property and are waiting on an application for our mortgage to be processed.

I closed the credit accounts as they were never used and I figured it would 'clean up' my credit report, effectively reducing the potential borrowing available by only having the one card.

Having just closed them and done a bit of reading, different articles seem to vary on whether this will affect your credit score, and in the case of our situation, our mortgage. I was under the impression that since MMR earlier this year, an individual will actually look at your credit report in detail, and as records go back for accounts that have been closed, they will clearly see the zero balance for quite a while before the accounts were closed.

What's the general opinion?

SeduLOUs

When did you close the accounts? They don't report immediately to the credit reference agencies anyway, it's usually only once per month.

I closed a credit card account about two weeks ago but it is still showing on my new Noddle report for today - it says that account was updated 26/11 so presumably it will correctly show as closed in the next week or so.

samsam89

SeduLOUs wrote: »

When did you close the accounts? They don't report immediately to the credit reference agencies anyway, it's usually only once per month.

I closed a credit card account about two weeks ago but it is still showing on my new Noddle report for today - it says that account was updated 26/11 so presumably it will correctly show as closed in the next week or so.

It was closed around 30mins ago.

It just interested me as there are lots of different perspectives on it.

I can't understand why it would be more desirable to lenders to have a mortgage applicant with 2 inactive credit cards than to have an applicant with 1 credit card that's paid in full each month.

However there's obviously more to it than that!

SeduLOUs

samsam89 wrote: »

I can't understand why it would be more desirable to lenders to have a mortgage applicant with 2 inactive credit cards than to have an applicant with 1 credit card that's paid in full each month.

It might be more desirable to some, it might not be more desirable to others.

We can only guess, as no individual lender will specify what their individual criteria are.

If you had say three very high limit credit cards, that could be seen as a much higher risk than only one card, as potentially you could go out tomorrow and get yourself into a lot of debt.

However, whether you have 1, 2 or 3 cards, if you are always paying them in full you will almost certainly look better than someone who has a single credit card with the limit almost maxed out and only making minimum payments.

It's just guesswork really, but it sound like you would more than likely be OK either way, assuming you don't have late payments or other nasties on your file.

Loopy28

I recently got accepted on my mortgage application subject to valuation.

I had checked my credit report prior and had about 8 inactive cards and managed to close most of them but this was about the same time I applied for my mortgage so to be honest it might not have even shown up on my credit report as being closed.

My mortgage was approved within 2 days of application and I was right at the top end of what the lender said they would lend me. I used a broker and all that was requested from the lender was my last payslip.

It probably depends on the lender but Santander didn't seem to care about the inactive cards showing on my record.

samsam89

Loopy28 wrote: »

I recently got accepted on my mortgage application subject to valuation.

I had checked my credit report prior and had about 8 inactive cards and managed to close most of them but this was about the same time I applied for my mortgage so to be honest it might not have even shown up on my credit report as being closed.

My mortgage was approved within 2 days of application and I was right at the top end of what the lender said they would lend me. I used a broker and all that was requested from the lender was my last payslip.

It probably depends on the lender but Santander didn't seem to care about the inactive cards showing on my record.

That sounds incredibly quick and smooth for a mortgage application. We dropped off the last bit of paperwork to the broker this afternoon.

On a side note, he has said I need to lower my car finance from £266 to £150 a month as the mortgage lender have said it's too high.

He's off for a few days between Xmas and new year so can't contact him but it sounds as though he's going to submit the application with the finance still in place. How does that work I wonder? I would have thought I'd need to sort the reduced finance first before any application would be made.

kingstreet

The relevant point is completion.

We tell the lender what will be repaid or reduced, on or before completion. They can add it to the mortgage offer as a condition.

Nothing has to be repaid or reduced on/by application. If it was, we'd have all kind of problems with the credit system not being updated quickly enough.

Thrugelmir

samsam89 wrote: »

What's the general opinion?

There's no harm in good housekeeping. The benefits in terms of the mortgage application are probably fairly limited. Could be some weeks before your files reflect the closures.

samsam89

kingstreet wrote: »

The relevant point is completion.

We tell the lender what will be repaid or reduced, on or before completion. They can add it to the mortgage offer as a condition.

Nothing has to be repaid or reduced on/by application. If it was, we'd have all kind of problems with the credit system not being updated quickly enough.

That's extremely helpful to know! Many thanks for that. As first time buyers, the process is somewhat alien at the moment.