How to manage potential credit and affordability

beakysian

I've assumed that holding credit cards and using them here and there for small purchases and paying them off immediately would reflect well in my credit record. However, I've started to wonder whether the opposite is true as it could appear to potential lenders that I could quickly sink myself into an unaffordable debt pit if I chose to max out my cards.

I have cleared both of my credit cards but kept both open. I cleared the second one last summer out of necessity when my card tarting ways were abruptly interrupted by being refused a balance transfer deal. I emptied my savings rather than start paying high interest. Both cards have balance limits of £3500 and a current balance of £0. I would like to keep at least one for emergencies (while I rebuild my savings) and for daft things like car hire abroad which will only accept security deposits against credit cards (not debit cards).

Would I be wiser to close one card and keep the other, or keep both but reduce their limits? Any advice and experiences very welcome

[Deleted User]

With only two cards and modest limits, I would keep both as they are.

Make sure you use them regularly and clear in full each month once you have received the statement.

beakysian

Any other views on this? I know there isn't a hard and fast answer so interested in any experiences and suggestions. Thank you.

Nebulous2

I'd keep them both. Use them, stay well within limits and pay in full every month, once you have received your statement.

I'm quite tardy at closing cards and never have any problems getting credit, even with substantial unused credit limits.

It would depend a bit on your short /medium term objectives. If you foresee a need for substantial credit (a mortgage for instance) then take advice well in advance.

People make this whole chasing credit thing far too complicated in my view. You should never pay money needlessly to chase a rating - either in fees to a CRA or in interest.

Show stability, be on the electoral roll, have some longstanding accounts, pay everything on time.

Then make credit work for you, rather than chase it.

Superscrooge

Good advice from Nebulous and ZX81

I also suggest keep both cards and leave the credit limits unchanged

takman

You say your are making small purchases and "paying them off immediately". I hope you mean you wait until the statement then pay them off, if you make a purchase and immediately pay it off it may not register on your credit report as being used.

Also I wouldn't worry about two cards with £3500 limits, I have three cards all with much larger limits than that and I haven't been turned down for any applications in a very long time.