Cancel High Credit Limit Credit Card before Mortgage Application??

tome87

Hi all,


I'm pretty savvy when it comes to money, but I'm stuck on a particular question. I'm moving into a bigger house (hopefully!) and therefore applying for a bigger mortgage. The only debt I had was a Credit Card which was 0% with 9 months still left of the interest free rate. I've now paid this card off fully so that the Mortgage company (Tesco) can now see I have no debts whatsoever. The Credit card I paid off gave me a limit of £11,000. Does it look better if I keep this card open so that the mortgage company can see I have a high credit limit, or do I close it so it doesn't appear I have it. I have one more credit card with £10,000 limit which I have used for several years as my everyday spending (I get Tesco points!)


Any advice/help would be much appreciated! Thanks

AnotherJoe

Why not phone the card providers and have the limits lowered ?

MickeyDaMouse

Yep, I'd reduce it too - if you want to keep it. If not close the account.

The available credit on a credit card is taken in to consideration when applying for a mortgage. Even if the card is paid off and nothing is outstanding on it the fact that there's X amount of funds available to borrow at any time can affect your mortgage application adversly.

MickeyDaMouse

Also keep in mind it takes at least a month to update your credit files with the account status of a credit card.

Tesco are quite quick and normally do it within a month, but Barclaycard have taken over 2 months in the past in my experience to update my credit file when I've paid off a card.

If you're applying for a mortgage and you're relying on paying off a card to make sure you look better to a lender then pay it off as soon as you can. If you leave it too late the lender will still be lead to believe the card has a balance of X amount despite you paying it off.

sultanabran

MickeyDaMouse wrote: »

Also keep in mind it takes at least a month to update your credit files with the account status of a credit card.

Tesco are quite quick and normally do it within a month, but Barclaycard have taken over 2 months in the past in my experience to update my credit file when I've paid off a card.

If you're applying for a mortgage and you're relying on paying off a card to make sure you look better to a lender then pay it off as soon as you can. If you leave it too late the lender will still be lead to believe the card has a balance of X amount despite you paying it off.

If affordability is tight and it depends on you having paid of a credit card, I'm sure a letter from the card company confirming a zero balance would suffice.

Jenkic20

You can prove the status of a credit card without relying on a credit report by getting a statement from the bank.

Before applying for my recent mortgage - I paid off CC's like yourself then did the following:

Closed Tesco CC with £3k limit
Reduced Creation CC from £3k limit to £1.5k limit
Reduced HSBC from £5k limit to £4K limit

That left me with £5.5k CC availability from £11k.

I personally wouldn't close your one card as there's nothing wrong with having a CC if it is managed correctly.