Cleared credit cards and credit rating

Stacey1234

Hi everyone

I have recently taken out a loan of £15,000 to consolidate debts. This means I now have three credit cards which I've completely cleared (£5,000, £10,000 and £12,000 limits totalling £27,000 in credit) and I am wondering what is best to do with them.

For practical reasons I want to keep one open to deal with any emergencies and just have a safety net.

My question is what to do with the others. Will it negatively impact my credit score to close them and have less available credit? I'm conscious that I have a fixed rate mortgage which comes to an end in July 2019 and I don't want to do anything that will have a detrimental effect on that.

Any help greatly appreciated!

[Deleted User]

Don't worry about your credit score, It's a gimmick only you see and isn't a remotely accurate indication of your credit worthiness.

I would keep the cards as you only have three, with moderate limits, as long as you trust yourself not to overspend again.

Willing2Learn

Hi Stacey1234 and welcome to the forum.

Just wanted to say be very careful how you move forward. The MSE forums are littered with members who get a consolidation loan, and end up doubling their debt as a result of not addressing their poor budgeting skills. Will you be tempted to spend again on the cards, or have you learned the necessary budgeting skills?

Stacey1234

There are a few large expenses on there that are one offs but not being able to clear things quickly (or to be honest, not managing the balances well) has led to heaps of interest. I’m pretty sure I can keep things under control when it comes to new spending but wanted to have a credit card as a back up for anything unexpected. I’m unlikely to need such a large amount of credit again but wasn’t sure if by closing the cards I’d cause more problems than I’d solved.

Fair point about it potentially being a quick way to make things worse instead of better though!

enthusiasticsaver

I would also exercise caution. Most people who consolidate debt go on to run up more on credit cards thereby increasing debt. If you think you will be tempted to spend again on them I would close two of them and leave one open but repay in full monthly should you spend on them. Forget about the credit score and concentrate on running your finances sensibly.

Craig1981

i agree with comments above...
you need to be absolutely certain you will not spend on them again, but to keep them open. cut them up so you unable to use them for a while, or put them in a drawer and forget about them - use every couple of months to keep them active
however if you going to be tempted, best to close them down

now is the time to do a full statement of affairs - see what your expenses are, your outgoings etc, make cut back where possible, and also overpay the loan as and when you can to reduce balance as best as possible prior to July 2019

System

Cut two of them up, keep the third for emergencies. You already got yourself £15k in debt with them once, you don't want to repeat that with a £15k loan to pay as well.

I had four cards, two of which I no longer used with a combined balance available of over £21k on those two cards. I closed them two months ago, it made absolutely no difference to the credit score I don't give a frig about because like zx81 I know its all a load of rubbish.

Regarding the remortgage the amount of debt you have is more likely to be an issue than the fact you closed credit card accounts. Remember that you can remortgage with your existing lender and that when you do that there is no requirement for them to do an affordability test beyond asking you if you can afford the repayments. Depending on how much you owe if its sub £100k the fees for remortgaging with another company could wipe out any savings from a lower rate than offered by your existing lender for a new fixed deal.

Stacey1234

Thanks everyone for your advice. I think I will close one card and keep 2 open with the cards tucked away for emergencies.

I didn’t realise that if I stayed with my current mortgage provider there would be a lesser affordability check so that’s really helpful.

Thanks!

Samsung_Note2

nonesuch wrote: »

You could freeze them. As in... put them in your freezer. :rotfl:

wikihow.com/Freeze-a-Credit-Card

youtube.com/watch?v=hBztsKwX-WI

Trouble with that is you can still carry on running up a balance...i know some sites like Just Eat store your card and you just click use card and enter 3 digits off the back and there you go money spent.

Best chop them up and bin them and close the accounts...credit cards and over drafts are great,but can be a complete nitemare unless you keep on top of them.