Closing down unused credit cards before applying for a mortgage?

Felix11

Hi,

I am in the process of purchasing a new build property. I have a DIP with Nationwide and I have reserved a plot.

My credit score is 958/999 with Experian. I have 5 credit cards, 3 not being used, 2 with small balances. Because of the 5 cards I have, my total limit available to me is high but my usage/utilisation is low at about 33%.

I have heard that before applying for a mortgage I should close down any unused credit cards as it doesn't look good to a lender. If I do this, my ulilisation of credit will then of course be higher vs. my limit and that will probably look worse. Exeprian however are suggesting that having low utilisation of credit available to me is a positive factor on my report right now.

This is where I am now unsure. Do I close the cards which will increase my utilisation - and not look so good. Or do I leave the cards open which could potentially make a lender think I am about to go out and spend loads of money! Also not good.

Please help thank you!

[Deleted User]

Keep them. Don't make any key changes befog for a mortgage.

Ignore your fictional credit scores and any advice given by Experian, but make sure you check all three files for any negatives, so you can manage your application appropriately.

If your card balances are interest bearing, consider getting them cleared.

JimmyTheWig

Felix11 wrote: »

I have heard that before applying for a mortgage I should close down any unused credit cards as it doesn't look good to a lender. If I do this, my ulilisation of credit will then of course be higher vs. my limit and that will probably look worse.

You've answered your own question right here. It sounds like closing the accounts will make things look worse in this situation.

Try and pay off the balance on the other cards in full each month, though. That will help.

kingstreet

Such a level of micro-management is not necessary.

I have not needed to advise someone to do that in the 35 years I've worked in the mortgage sector.

Yellow_mango

I had this recently. I have 5 credit cards, one paid off in full monthly ( limit of 14k with rolling balance between 2 and 5k), one with a small balance at 0% (limit of £11k, balance of £5k), the other 3 unused (total limits maybe £25k).

The broker I spoke to did advise me to close down unused cards. I closed one of the smaller ones (around £5k) which I was planning to close anyway.

Mortgage went through fine :-)

Finchy2018

I have 5, one carrying a fairly large balance, the rest unused. My mortgage offer was on the condition my card was cleared before the mortgage started (which i Did, but was not asked for proof) I still have the cards though and it was never suggested by my broker to close them.

amnblog

As KS says.

Don’t rely on such an action making any difference.

Waste of time.

Sounds like Mango’s Broker heard the same ‘rumour’ our original poster did.

bertiewhite

I was never told to close any of my 4 cards before mortgage application either, I just had to provide copies of the latest statements.

The only stipulation was that the balances had to be cleared but like Finchy, there was no proof required - the broker explained that the clause was included so that if I didn't clear them and then got into difficulty with repayments, the lender would be less sympathetic.