Closing Accounts or Lowering Credit Limits

Barrotti

Hi All

I currently have 2 cards a Vanquis card with £3000 this card is never used and a Halifax card with a limit of £7000 my current deal with Halifax will end shortly and the outstanding balance approximately £3000 I plan to move to a new card

Would it be wise to close the Vanquis account to free up the £3000 and then once I’ve transferred the outstanding balance from the Halifax close that one so that if needed in the future I can reapply?

Ideally I want to run with one card which I can use for balance transfers and interest free purchases and at the end of each deal move on

Will closing these accounts have a negative effect or would it be better to lower the limits freeing up total available credit

Any ideas would be much appreciated

Paul B

[Deleted User]

Depends.

You're at 30% usage, which is not an insignificant amount. Lowering limits will make this worse.

On the other hand, you need to balance likely total limits with your income.

Barrotti

Deleted_User wrote: »

Depends.

You're at 30% usage, which is not an insignificant amount. Lowering limits will make this worse.

On the other hand, you need to balance likely total limits with your income.

Thank you how would I calculate that figure

[Deleted User]

Limits as a % of your income would be a start. But the absolute numbers are also important, as it's about affordability.

darkidoe

Barrotti wrote: »

Hi All

I currently have 2 cards a Vanquis card with £3000 this card is never used and a Halifax card with a limit of £7000 my current deal with Halifax will end shortly and the outstanding balance approximately £3000 I plan to move to a new card

Would it be wise to close the Vanquis account to free up the £3000 and then once I’ve transferred the outstanding balance from the Halifax close that one so that if needed in the future I can reapply?

Ideally I want to run with one card which I can use for balance transfers and interest free purchases and at the end of each deal move on

Will closing these accounts have a negative effect or would it be better to lower the limits freeing up total available credit

Any ideas would be much appreciated

Paul B

My question would be why are you worried about the credit history at all? Are you planning a mortgage, loan in the near future?? If not, just get the best deal you can out of the credit card promos out there.

It is always advisable to keep a card with a long history to provide some credit worthy history just for reference. I would keep at least one of the older cards around until the new card has a reasonable history built on it before closing it.

ani*fan

Hi Paul B

This is an interesting question and one I've thought about too. My credit score is quite good, but I'm saving for a mortgage in the next couple of years so want my credit score to look amazing. I'm also paying off debt.

Given the chat on this thread and info already here, I wondered how big a % of available credit being used looks good to lenders? is it better to close cards down as you pay them off? What length of time is considered a 'reasonable history' to have a cc account?

Sorry if this reads like a hijack.

[Deleted User]

It all depends on your limits, balances and income.

Whatever you do, don't use your score as a measure of anything.

Barrotti

Deleted_User wrote: »

It all depends on your limits, balances and income.

Whatever you do, don't use your score as a measure of anything.

My concern is trying to understand what my total available credit could be surely any new lender will be able to see not just whats outstanding but the total available per card, there must be a limit obviously salary dependent of total credit available to me ..How is that calculated

Thanks Paul B

[Deleted User]

A general rule of thumb often quoted is that lenders may get nervous if you have more than 50% of your income in available credit.

An equally nervous if your debts are more than 50% of your available credit.

But it can vary tremendously across providers and by individual circumstances. There is no one size fits all calculation.

Barrotti

Deleted_User wrote: »

A general rule of thumb often quoted is that lenders may get nervous if you have more than 50% of your income in available credit.

An equally nervous if your debts are more than 50% of your available credit.

But it can vary tremendously across providers and by individual circumstances. There is no one size fits all calculation.

On the strength of that as the Vanquis card is the longest running surely it would make sense to keep that running and close the Halifax ,once its clear freeing the £7000 making it available in the future

Gunther_Golf

Some interesting information on the thread. I currently have the following lines of credit.....

Credit Card 1: Credit Limit £12,500
Credit Card 2: Credit Limit £6,000
Catalogue: Credit Limit £3,000

Total £21,500 - All 3 balances are currently zero.

Personal salary is £26k. Credit available to me as % of income is a little over 80%. It's been higher in the recent past as i closed a MBNA Credit Card with a £5k limit recently which would have made that 80% actually over 100% of income.

In the last month i was approved for and completed a £128,500 joint mortgage with Halifax putting only 8% deposit down with no issues whatsoever.

Credit is a strange world.