Balance transfer, closing account and effect on credit rating

Leo_AW

Hello,

Hope you're all well?

I currently have an Aqua Advance credit card which I got circa 18 months ago to improve my credit score. It's worked well and my Noddle credit score is 5/5 (647) which is up from 2/5 when I first got the card. I've never had true credit card debt as I just used the card for my daily purchases and paid it off every month with money from my current account. However, I got married and went on honeymoon in July so my balance is a little higher than usual. I am also going to be renting my house out next year so it needs a new bathroom before I put it up to let and with this in mind I started to look for a good all round credit card for balance transfers and purchases. I have been pre-approved for the Virgin Money All Round credit card which will do me fine as I don't intend on borrowing much money or for a particularly long time... I just want to avoid Aqua's 34%. So, my question is; if I transfer my Aqua balance to a Virgin Money card and close my Aqua account, will this have a big impact on my credit score? Would it be better to transfer my balance and also leave the Aqua card running at £0 for a few months?

Thank you for your help!

Leo

Weybridge78

It may be negative in the sense that it is currently your only credit card therefore the one you have the longest relationship with. If you closed it after opening the Virgin card, this may lower your "account stability". I think others would agree in me saying to keep it open for the time being with the balance of £0.

Edit: Having read your post for a second time, just remember that the Noddle score is meaningless. Your credit history is what matters e.g. no late payments etc.

Leo_AW

Thank you for your help!

I had a default on my account from my student days but that finally disappeared this year and other than that default (long story about warning letters being sent to old addresses etc) I've never made a late payment in my life. So with that in mind , would the mere act of opening the second credit card have a negative impact on my history if the balance of my original one remains at £0? It's just a much better card than my Aqua card which was for people with a poor credit history and I'd feel much safer knowing that in the worst case scenario I will only get stung with 18.9% rather than 34.9%.

Weybridge78

No, opening the second credit card will should have a negative impact if the Aqua balance is zero. If you use a significant proportion of your Virgin credit limit, this may be seen as a slight negative.

Leo_AW

Weybridge78 wrote: »

No, opening the second credit card will should have a negative impact if the Aqua balance is zero. If you use a significant proportion of your Virgin credit limit, this may be seen as a slight negative.

Nothing to get too worried about though? The balance transfer will probably only be circa £1500 and i'll pay off £1000 at the end of the month and the remaining £500 end of next month.

Alexd52

If you are balance transferring to a 0% card, you are better off not paying it back too quickly. Balance transfers usually have a fee, and clearing too quickly may mean that the fee amounts to more than the interest you would have paid had you kept it on the original card and paid it off at the same rate.
Also, if it is a 0% balance transfer, you are better off not spending on that card whilst the balance remains. It is better to have a second card for everyday spending and paying off in full each month.

Leo_AW

Alexd52 wrote: »

If you are balance transferring to a 0% card, you are better off not paying it back too quickly. Balance transfers usually have a fee, and clearing too quickly may mean that the fee amounts to more than the interest you would have paid had you kept it on the original card and paid it off at the same rate.
Also, if it is a 0% balance transfer, you are better off not spending on that card whilst the balance remains. It is better to have a second card for everyday spending and paying off in full each month.

Perfect - thank you! So I will transfer Aqua balance to Virgin card and repay this over a few months whilst continuing to use my Aqua card for day-to-day purchasing and paying back in full each month... and overall this shouldn't really have a negative impact on my credit history?

Alexd52

You are correct, overall this would have very little negative impact as long as you demonstrate responsible use of your cards. It is generally useful to have a backup card anyway, in case of problems with the main one

Leo_AW

Alexd52 wrote: »

You are correct, overall this would have very little negative impact as long as you demonstrate responsible use of your cards. It is generally useful to have a backup card anyway, in case of problems with the main one

Thank you! You're right - my Aqua has zero fees for using abroad so will be handy to keep in my wallet anyway I guess!

Thanks for your help guys, much appreciated.