Trying to get debt free - Cancel or not cancel

callum9999

cymruchris said:

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

From board experience - it's often mentioned that closing cards can have a negative impact on your short term positive history. So closing several accounts in succession might 'look' as though the banks have decided to withdraw their services - although it can be as in this case someone wanting to rationalise their portfolio, the trouble is, there's no way on your data to show whether it was you or the bank that made the decision to close the accounts (would be nice if the data was included though).

I then mentioned if you have nothing to apply for over the next 6 months, that might be a good time if you want to close a couple of high APR accounts. (As with everything on your history - time is always a great healer). I agree with Graham above - Generally clear balances and keep credit lines open.

In my own experience - I've continued to build positive history, keeping cards active an open (my first credit card post-bankruptcy was a Vanquis - I pop a transaction on once every couple of months to keep it alive - as it's now my oldest card - and banks like stability). I have closed a couple of Capital One accounts though - but did that at the time of opening a new card - so the records show a new account being added, and one being taken away. 

It's all logarithms and data though - churned through machines. We're all giving our best guesses as to what they are looking for, and it'll vary from bank to bank. And our experiences will vary person to person. That's the nature of forums though - discussion - evaluation - and then decide what's best for us. There will always be polarising views - and it's rare that everyone will agree with everyone - but that's my twopenneth as they say

If they suspect the banks decided to close them, why does waiting 6 months change anything? Nor does opening another card at the same time prove anything - if the new provider was able to see the reason for your other card being shut down, so could the provider you're currently applying to. If they can't then their judgement on whether you should have a card or not is irrelevant.

You're correct that there isn't a single right answer, but I don't see any logical reasoning as to why a future lender would see a card with a perfect payment history being closed as a red flag. If you're just repeating what a different board thinks then fair enough though! Hopefully one of them can explain their reasoning.

callum9999

Graham1982 said:

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

It's completely normal to close credit cards, and even putting aside it's likely a computer algorithm deciding and not a person, I don't think any lender is going to see a card with a positive payment history being closed and seriously think "what if they know something we don't and forced them to shut the card".

You're right that it will impact utilisation, and it will also impact on average account age. I suspect closing a couple of the smaller unused ones will have absolutely no negative impact at all - but it's hard to say without a clearer picture.

I am not qualified to wade in on this but I was told on the debt free wannabe forum that closing credit accounts can throw up questions as often creditors close accounts of the financially irresponsible so the assumption might be made that if several cards are closed, the pattern could be interpreted as several creditors removing a service because of poor management by the customer. By the way I am basing this on my situation, not the OPs and I am not saying they are financially irresponsible.

I was told rule of thumb: Clear balances, keep lines of credit open.

Thanks

Graham

I have no idea why you've been told that.

They can see the payment history on the card. If it has always been paid on time and has had a zero balance for months, the odds of it being forcibly closed for "irresponsible behavior" seem infinitesimally small.

I'm not infallible though, if one of the people giving this advice are able to explain it, maybe I'm wrong?

cymruchris

callum9999 said:

cymruchris said:

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

From board experience - it's often mentioned that closing cards can have a negative impact on your short term positive history. So closing several accounts in succession might 'look' as though the banks have decided to withdraw their services - although it can be as in this case someone wanting to rationalise their portfolio, the trouble is, there's no way on your data to show whether it was you or the bank that made the decision to close the accounts (would be nice if the data was included though).

I then mentioned if you have nothing to apply for over the next 6 months, that might be a good time if you want to close a couple of high APR accounts. (As with everything on your history - time is always a great healer). I agree with Graham above - Generally clear balances and keep credit lines open.

In my own experience - I've continued to build positive history, keeping cards active an open (my first credit card post-bankruptcy was a Vanquis - I pop a transaction on once every couple of months to keep it alive - as it's now my oldest card - and banks like stability). I have closed a couple of Capital One accounts though - but did that at the time of opening a new card - so the records show a new account being added, and one being taken away. 

It's all logarithms and data though - churned through machines. We're all giving our best guesses as to what they are looking for, and it'll vary from bank to bank. And our experiences will vary person to person. That's the nature of forums though - discussion - evaluation - and then decide what's best for us. There will always be polarising views - and it's rare that everyone will agree with everyone - but that's my twopenneth as they say

why does waiting 6 months change anything?

6 months would demonstrate continued positive management of your other existing accounts, and would indicate that 'you' are not a potential problem customer (where a bank had decided to withdraw credit for whatever reason). It's usually recommended  to leave a period of stability between making bigger changes to your credit history rather than jumping from card A to B to C (Unless you have a HUGE history with many banks - all being very positive). Otherwise we'd all be going out tomorrow and applying for 25 credit cards hoping that one would accept, and then trying again a fortnight later. Time is a great healer when it comes to improving our positive history, and achieving better deals.

callum9999

cymruchris said:

callum9999 said:

cymruchris said:

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

From board experience - it's often mentioned that closing cards can have a negative impact on your short term positive history. So closing several accounts in succession might 'look' as though the banks have decided to withdraw their services - although it can be as in this case someone wanting to rationalise their portfolio, the trouble is, there's no way on your data to show whether it was you or the bank that made the decision to close the accounts (would be nice if the data was included though).

I then mentioned if you have nothing to apply for over the next 6 months, that might be a good time if you want to close a couple of high APR accounts. (As with everything on your history - time is always a great healer). I agree with Graham above - Generally clear balances and keep credit lines open.

In my own experience - I've continued to build positive history, keeping cards active an open (my first credit card post-bankruptcy was a Vanquis - I pop a transaction on once every couple of months to keep it alive - as it's now my oldest card - and banks like stability). I have closed a couple of Capital One accounts though - but did that at the time of opening a new card - so the records show a new account being added, and one being taken away. 

It's all logarithms and data though - churned through machines. We're all giving our best guesses as to what they are looking for, and it'll vary from bank to bank. And our experiences will vary person to person. That's the nature of forums though - discussion - evaluation - and then decide what's best for us. There will always be polarising views - and it's rare that everyone will agree with everyone - but that's my twopenneth as they say

why does waiting 6 months change anything?

6 months would demonstrate continued positive management of your other existing accounts, and would indicate that 'you' are not a potential problem customer (where a bank had decided to withdraw credit for whatever reason). It's usually recommended  to leave a period of stability between making bigger changes to your credit history rather than jumping from card A to B to C (Unless you have a HUGE history with many banks - all being very positive). Otherwise we'd all be going out tomorrow and applying for 25 credit cards hoping that one would accept, and then trying again a fortnight later. Time is a great healer when it comes to improving our positive history, and achieving better deals.

The 6 months of perfect history before the closure demonstrates it too.

The only way this theory makes sense is if the lender has access to information that isn't reflected in the credit report.

Now I'm really curious who is giving out this advice because the more it's repeated the more utterly absurd it sounds to me!

phillw

I don't know if any lenders think the same as me, but if I saw someone pay off a card, close it & apply elsewhere then I'd think they were trying to improve how I perceived them & that is a red flag for me.

I'd much rather see someone leave a card at a £0 balance for a while, to show they have restraint. Just think what a normal person would do (IMO most people are too lazy to close old credit card accounts straight away)

Of course some lenders might be looking for customers who make mistakes, so they can be hit with fees and interest. Just not so bad that they will go bankrupt or have to write off the debt of course.

callum9999

phillw said:

I don't know if any lenders think the same as me, but if I saw someone pay off a card, close it & apply elsewhere then I'd think they were trying to improve how I perceived them & that is a red flag for me.

I'd much rather see someone leave a card at a £0 balance for a while, to show they have restraint. Just think what a normal person would do (IMO most people are too lazy to close old credit card accounts straight away)

Of course some lenders might be looking for customers who make mistakes, so they can be hit with fees and interest. Just not so bad that they will go bankrupt or have to write off the debt of course.

I don't like making definitive statements when it comes to credit reports because there are so many grey areas, but I'm going to go out on a limb and say absolutely no lender thinks that someone closing an unused card and opening a new one is a red flag that they're attempting to manipulate their credit file.

And to suggest deliberately keeping a credit card open that you do not want to prove "restraint" is bizarre given that's far more manipulative... You're deliberately changing your behaviour and operating your accounts solely to keep up appearances!