close accounts or reduce utilisation

kbeetle

Hi,
We have 4 credit cards close to limits and therefore 95% utilisation.
In order to get a new mortgage we are looking at paying off half the debt in order to have a better credit file for the mortgage application.


We have heard differing things however about whether it's looked upon better to either

1. Pay off 2 cards completely and close the accounts so less borrowing capacity, but keeping high utilisation of other 2 cards

2. Pay off half of each card balance to get utilisation % down
3. Pay off 2 cards but keep accounts open to keep utilisation down.


Any suggestions? We don't want to pay off a big chunk of debt and then find out they decline due to doing it in the wrong manner



Thanks in advance

Willing2Learn

If it were me, I would pay off as much as I could across the four accounts to lower utilisation as much as possible. I would keep all accounts open, so that lenders can see the evidence of successful credit account management.

Craig1981

pay off each one so that they around 35 - 40% utilisation on each

kbeetle

Thanks, yes that's how I am inclined, however it seems it is just dependent upon the company lending?

Any ideas on what natwest prefer? Or is that random too?

SlovakianGuy

kbeetle wrote: »

Thanks, yes that's how I am inclined, however it seems it is just dependent upon the company lending?

Any ideas on what natwest prefer? Or is that random too?

I really doubt anyone would know what NatWest (or any other bank) prefer. They tend to keep their criteria secret.


I personally would keep all my cards open and active as this shows stability. Don't close anything if you plan to apply for the mortgage. Of course, lowering your credit utilisation is only a good idea. Getting it below 50% should have really positive effect.

[Deleted User]

If in doubt speak to a broker

Thrugelmir

Lenders will review account usage/balances over the period of history available. There's no one single criteria. How much you owe in total will influence their decision. If you can afford to repay half the debt, are these 0% credit cards?