Pay off and close old card or pay lump on existing high-balance card

Tim_S_2

I'm trying to improve my credit rating, which is currently in the fair/good range, with no real negative aspects other than a high balance and high utilisation on a couple of cards.

I have one long-standing suspended card account with a high limit on it, which I've been slowly paying off over the last few years, and only a couple of grand balance left. Due to the low utilisation of this "card", I guess it's helping keep my overall credit utilisation down.

My question is; I have the funds to pay off that balance and close that account this month, but is it better to do that (and losing a low-utilisation card in the credit reference agency's eyes) or keep paying it off slowly and dump my spare funds on either the high-balance card and/or one of my highly-utilised cards?

As I see it, the pros with closing this account are that's an account closed (good I assume), frees up some overall credit limit (brings down my overall limit, if that's useful), and it's one monthly payment I can redirect elsewhere. But the cons may be I'm losing a long-standing stable financial relationship with the company (though I do have several), I'll lose a low-utilised account (so increasing my overall credit utilisation), and I'll still have one card with over £10k balance.

Thoughts? Is it swings and roundabouts?

[Deleted User]

It all depends on your limits, balances and income.

Plus, I would always keep at least 2-3 cards.

Tim_S_2

Deleted_User wrote: »

It all depends on your limits, balances and income.

Plus, I would always keep at least 2-3 cards.

Thanks - I thought it might be an "it depends" answer

Trying to give detail while simultaneously being vague ~£23k overall balances across 4 cards, about half on one card, all cards are over 95% utilised apart from the one I'm considering closing, which is about 20% utilised (>10k limit). Income is several times the overall balance, so comfortable, generally have several hundred a month spare to pay off across them.

[Deleted User]

Sounds like you should keep them all.

Chappaz

Why not just pay off the card balance and keep it open to maintain a more preferable credit utilisation?

You don't necessarily have to close it just because you've cleared the balance. With the impact it will have on your utilisation, and the fact it's a long-standing account lost, it will most probably do you more harm than good.

A few card accounts won't do any harm either.

There are two ways of looking at the available credit limit situation. If you have a lot, it's an indicator that you have the ability to suddenly get yourself into loads of debt you couldn't afford to pay back.

However, lenders also like to see some cards with high limits because it's an indicator that other lenders trust you.

Personally, I think lenders care more about how the cards are used instead of what is available to be used. If you have open cards with high limits you aren't using, they may even see this as a positive because it shows restraint and shows that you aren't tempted to use the credit just because it's there (as so many often are).