credit card and mortgage question

alabama1985

Hi all,

Myself and my husband got in to a ‘spot of bother’ with some credit cards which either have high interest or are near their limits, we are applying for a mortgage in a few months (March/April) and are extremely lucky that my dad has offered to pay them off for us and we can pay him back in the future in a year or so, once everything is settled with our mortgage (fingers crossed!)

Anyway my question is, once the cards are cleared should I close the accounts or leave them open and inactive? Which looks better to lenders? We have about 6 cards and are paying them all off over the next week or so, should we leave some open? I never want a damn credit card or to get in this mess again, but will leave them open if that looks better?

Thanks in advance

[Deleted User]

alabama1985 wrote: »

Anyway my question is, once the cards are cleared should I close the accounts or leave them open and inactive?

Neither.

The smart thing to do is to keep them, use them regularly and clear in full each month.

Demonstrate to lenders you can handle credit.

However, if you can't control your spending, then you should close them.

alabama1985

Deleted_User wrote: »

Neither.

The smart thing to do is to keep them, use them regularly and clear in full each month.

Demonstrate to lenders you can handle credit.

However, if you can't control your spending, then you should close them.

ok thank you, I would rather some were gone to be honest, one in particular was an old aqua card that i was paying ridiculous interest on, so in my mind I wanted to close that completely and be rid of it forever as that's what got me into this mess. We also have a MBNA card which a high balance but 0% until September, perhaps we should pay that off but keep it open and use as you instructed?

dwsjarcmcd

I think the suggestion to keep some open is a good one but you don't need to keep all 6. Close down the 4 or 5 you don't want, then potential lenders won't think you have access to unsustainable levels of credit after you have bought a property.

alabama1985

thanks both. Another question I have is how long after balances are paid off does it take for credit reports to improve? we are hoping to get the mortgage say start-mid April (we are buying the house we currently live in from my parents and their mortgage only lasts until June) our scores aren't terrible and payments have always been paid on time, BUT the large CC debts we're affecting how things looked. thanks!

[Deleted User]

Your credit files will improve immediately, as you no longer have the debt. The longer you stay out od debt, the better.

The scores themselves will probably drop though, which is why you should always ignore them. They're not real credit scores or seen by anyone else.

They're only provided for entertainment purposes, like horoscopes.