closing old 'poor' credit accounts

NorthantsPete81

i have about £25k unused credit just sitting there doing nothing, the APR is high and I will never use the service, even if i needed to.
So as its bad to impact your borrow to availability ratio, should i just leave them dormant or use them a bit or just close them off?
Id ideally like to get a new loan in the future at a better apr - i believe the fact I have £25k available will limit my ability to get better credit offers as the current APR was not as good as the online price 'due to my circumstance' - i have a good credit record, good income and loads of free credit i dont use so im not sure what they mean, i can only thik I have too much attached to me if i one day went AWOL



On american sites some lender slike to see quality credit such as Amex on your file and having someone like AQUA or Vanquis would show youve been a risk at some point... how true is this? I have £15k of that stuff sat there empty

[Deleted User]

It depends on the make up of the 25k, but it's not a large total limit, so I would be inclined to leave it if it's just credit cards.

Lenders won't see the names of who has extended you the credit, so that bit's not true at all.

NorthantsPete81

To add, the posts ive searche don seem to affect those 'better' lenders such as mbna, virgin etc. none seem to address the poor credit lenders...

[Deleted User]

Lenders do not see the provider of your credit cards - just the limits etc, not who the card is issued by.

What do you need the loan for?

[Deleted User]

'Better' lenders will have more stringent acceptance criteria but equally, better products.

And vice versa for poor credit lenders.

NorthantsPete81

Home improvements - Adding 100k to the house value. I can also remortgage in a years time, whichever apr is lower - the loan tems will be 10 over years though (higher monthly payment) opposed to 25 years on the mortgage so cheaper int he long run.


If I never use the cards, i dont see any point other than it boosts my ratios, Ive been told using them now and then is also a good idea, to keep them active but surely if I have say £100k available unused credit, and im using £5k of it, my chance of a decent £20k loan would be declined as ill then have £120k in possible credit and so higher risk?
Would it not be better to have say £50k credit card limit and then go for the £20k loan? (£70k vs £120k available credit)

[Deleted User]

If you have £100k, and your income doesn't support it, then you might want to close some of it down.

You're going to need to be more precise with figures, including income, as I thought it was £25k you had.

Certainly make sure you're using some of it, clearing in full each month.

NorthantsPete81

Sorry, ok, so income is £50k


Credit available is £40k
Credit in used £8k


So im at 16% usage to availability



Vanquis has £7500 unused
Aqua £7500 unused

Amex also dont use, was going to drop that limit from £9k to £1k

I was going to reduce their limits and close aqua and vanquis, currently putting £670 towards credit cards a month to pay off some old debts, my car and house improvements already doneon credit card.

I guess that answers my own question - leave them until my ratio gets under 10%?

[Deleted User]

Don't reduce limits. If you need to, close the account completely, but having your limits lowered makes you look particularly high risk.

I'd keep it. It's only £40k in total.

Ben8282

Credit available is £40k
Credit in used £8k


So im at 16% usage to availability


This contradicts your earlier statement that you have £25k available credit as 40 - 8 = 32 not 25 and I believe your utilisation % is 20%, not 16%, which is relatively high
£25k (or is it £32k) unused credit on credit cards is not high. 20% utilisation however is. You are obviously not repaying in full every month. The existance of the £8k balance that you are not able to repay is more likely to cause you to get a higher APR on a loan or have the loan declined than the existance of available credit.

System

I'd be inclined to close rather than lower limits too.

I'd also look at cards that have limited benefits and you are unlikely to use (e.g Vanquis)