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Credit Card Utilisation vs Mortgage
danielrallye
Posts: 2 Newbie
in Credit cards
Good evening,
First post here, so please go easy!
My wife and I are planning to sell our house / move in April 2020.
I have 5x Credit Cards, total limit of £27k.
2x Credit Cards have a £0 balance (these 2 have a combined total limit of £8.5k, not interest free)
3x Credit Cards have a £6k balance shared between them (these 3 have a combined total limit of £18.5k, interest free)
My question is, should I close the 2x unused cards?
Advantage being it would bring my total cards to 3, which is maybe preferable to a mortgage lender?
Disadvantage being it would increase my utilisation from 22% to 31%
Advise greatly appreciated!
Many thanks,
Daniel
First post here, so please go easy!
My wife and I are planning to sell our house / move in April 2020.
I have 5x Credit Cards, total limit of £27k.
2x Credit Cards have a £0 balance (these 2 have a combined total limit of £8.5k, not interest free)
3x Credit Cards have a £6k balance shared between them (these 3 have a combined total limit of £18.5k, interest free)
My question is, should I close the 2x unused cards?
Advantage being it would bring my total cards to 3, which is maybe preferable to a mortgage lender?
Disadvantage being it would increase my utilisation from 22% to 31%
Advise greatly appreciated!
Many thanks,
Daniel
Options 7 votes
Keep 5x cards & low utilisation
71%
5 votes
Close 2x cards & increase utilisation
28%
2 votes
0
Comments
-
I would not close the accounts as longer, stable credit relationships are a positive and can indicate to potential lenders that other creditors trust you. I'm no expert though...I work within the voluntary sector, supporting vulnerable people to rebuild their lives.
I love my job
0 -
Don't close any accounts.
Although your credit card balance is not high, if you want to do something to improve your mortgage chances then reduce the balance.0 -
Why would 3 cards be preferable to 5 cards? I suppose if your annual wage is less than the total limit for all five cards then it may be a small factor, but surely having just three cards with balances on each would be more detrimental than having 5 with 2 having a zero balance.
The question is when are you aiming to clear the 6K, or how much will you clear by April 2020?0 -
Don't close them. Also, don't just leave them in a drawer. Use them so it shows some usage even if it's to buy a coffee on each one each month. Then clear the balance each month. Your credit report will see that as well managed credit rather than unused credit.0
-
Pay them off if you can.
The limits are fine but the balances may be a problem.0 -
I think a mortgage lender may see 5 cards and a high availability of credit as a score against you so I would recommend closing the 2 with the nil balance. The difference between the utilisation is only 9% so I would not consider that to be an issue. I would try to clear them before applying though.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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