How best to cancel cards for mortgage??

jazzyja

hi everyone. I'm currently saving for a mortgage and trying to pay off my debts. I've been doing quite abit of reading on here and was surprised that clearing your debt and closing all accounts actually harms your rating! So just looking for some advice on how best to do things. Currently I have the following - 
M&s credit card - £1600 *£3000 limit*
Tesco credit card - £1400 *£1500 limit*
MBNA - £0 *£500 limit*
Barclaycard credit card - £0 (had this card approx 5 years) *£2500 limit*
Next account- £450 *£5000 limit*
Argos card - £0 *£1000 limit*
I am going to the cancel the mbna just having trouble to get through due to the current crisis. I was thinking maybe cancel the 2 main cards once I've paid them and keep open the barclays, next and argos? Only pay half off the next? But would you stagger the closing of the cards? I could keep the barclays because its older? Or would you just get rid of it? I want my chances to be maximum. My credit rating is rated 'fair' on experian. My utilisation is poor. Also if I keep the barclays would you recommend for example getting my petrol on it then paying the card back right away? Or does that look like I need credit all the time? Any advice welcome!! Thankyou 

DCFC79

Ok well first your credit rating is only seen by you, lenders see your history.

Use a CC for petrol and shopping if you like.

I would close whatever cards I could via whatever means I could.

jazzyja

DCFC79 said:

Ok well first your credit rating is only seen by you, lenders see your history.

Yeah I've read that. I've not missed any payments in years or got a ccj. I think my biggest let down is the amount of debt against my earnings....but I'm unsure how they can see what I earn? Apparently its based off my age?? I'm 29. 

[Deleted User]

Your limits are very low.

Given you're carrying debt, I wouldn't be closing anything.

With regard to income, lenders will ask you when you apply.  No one assumes an income from age.

jazzyja

Deleted_User said:

Your limits are very low.

Given you're carrying debt, I wouldn't be closing anything.

With regard to income, lenders will ask you when you apply.  No one assumes an income from age.

No i wasn't planning to close until I pay the debt. My question was how would you close when the debts are cleared? I dont know whether to just keep them open or keep 1 open or what not sure. I'm planning on clearing the debt fairly quickly. So theyre assuming my income based on my limits? 

[Deleted User]

No one is assuming your income from anything. Lenders will ask you directly.


There's no need to close any cards but if you really want to, close the lowest limit accounts.  If you so, leave it a while before you apply for credit, as you'll be perceived as a little higher risk and lenders will want to be sure your current lenders are closing down your accounts.

jazzyja

Deleted_User said:

No one is assuming your income from anything. Lenders will ask you directly.


There's no need to close any cards but if you really want to, close the lowest limit accounts.  If you so, leave it a while before you apply for credit, as you'll be perceived as a little higher risk and lenders will want to be sure your current lenders are closing down your accounts.

OK thanks. If I leave it say 3 - 4 months? Would that be sufficient? 

Emmia

I'd close any that you're not using and can pay off, and I'd stop saving for a deposit until you've achieved this - leaving 1 card open with a zero balance.

Older accounts do score better, but do you really need access to 3 credit cards? 

jazzyja

Emmia said:

I'd close any that you're not using and can pay off, and I'd stop saving for a deposit until you've achieved this - leaving 1 card open with a zero balance.

Older accounts do score better, but do you really need access to 3 credit cards? 

I dont really need access to any to be honest. These are quite old debts I've been paying for ages. I haven't used the cards in over a year id say. One is my car insurance that I paid in full. I use the next and the argos I do use now and again for the buy now pay 6 months etc but haven't used it in a while 

NatalieAGC

concentrate on clearing your balances before closing any accounts. Any accounts you close you need to make sure they are the most recent opened ones. Also closing will affect your credit utilisation while you owe money so best keep all open until you owe nothing. 

I’m looking to apply for mortgage next month and I have £15,200 credit limits across 4 cards.. I owe £20 and will maintain less than £50 balance each month to show I use them well. 

phillw

I don't think they generally penalize people who don't know "the secret methods to obtain mortgages", as that would not seem in their best interests. The majority of people who would go out of their way to find those "secret methods" would likely be people they wouldn't want to lend to.