Paying off a credit card. Cancel account or not?

winters2809

Hello

I have had a search about the internet and can't seem to find some solid advice on this subject.

I have a very poor credit rating due to a DRO which has ran its course and now expired. I had a low credit credit card of £900 which has near its limit £860. I have recently come in to some money which I wanted to use to save and to pay off the credit card. However what I wanted to know was if I pay the full outstanding balance on the card, should I not cancel the card and close the account because keeping this available credit help with my credit rating? I understand that paying the debt off and cancelling closing the card off would increase the credit rating but would this only give it a one off increase?

I am a little confused at what o should do. I do want to pay the outstanding balance which I have made up my mind, as I was only paying the minimum monthly amount and sometimes a little bit more and it wasn't really going down much due to the interest.

Thank you.

[Deleted User]

Ignore your rating. Your score will likely drop when you clear the card but that's ok.

What you need is to build good history, so keep the card, use it regularly and clear in full each month.

winters2809

Thank you for the advice. That does make more sense to it that way.

Dobbibill

Keep it open if you can avoid going near the limit and getting into debt you can't afford.

Use it for regular spending you would normally do on your debit card and repay in full and on time every month.

You want to build history of responsibly managing credit - sailing close to your limit won't demonstrate this.

Sea_Shell

I'd spend say £200 on it, wait to receive the statement, then pay it off in full before the due date. Repeat.

You need to build up a history of responsible CC use.

If you pay off your spends BEFORE your statement is produced, it won't register that you're using the card on your history.

System

It depends on your approach to debt going forward:

• If you can repay in full each month then keep it.
• If this isn't realistic, probably better to pay off and close.

Paying a high APR or getting into further trouble will do more damage to your financial health than retaining a credit card.