Closing £0 balance cards 21 June 2022 at 2:06PM in Credit cards 7 replies 271 views

Fantomas01

Hi everyone

I have recently had a historical bankruptcy drop off my credit report.  I also have 3 credit cards with the following balances

Capital One - Credit Limit £200  Balance £0
Capital One - Credit Limit £450 Balance £0 - Recently paid off the outstanding balance of £315
Bip - Credit Limit £2,500 Balance £1,800 - Repaying slightly over the mimimum repayment at the moment.

I am looking to improve my credit score as it's currently showing on Experian as Fair.

My question is, should I close the 2 Capital One cards or leave them open ?  The cards have been cut up and deleted from Apple Pay etc so they wont be getting spent on again.

I dont want to close them if it would negatively affect my credit score.

Thanks
Matthew

WillPS

Your score will change if you make any changes at all.

The good news is it's all meaningless twaddle invented by the CRAs to try and flog a dream to consumers. No lender ever sees it.

Some advise keeping the longest-held card open. You're probably not going to close any doors long term by closing them however. Nobody (including the CRAs) knows the full impact of whatever you choose because it is down to each lender to judge whatever they can see as positive, negative or neutral.

[Deleted User]

Ironically keeping the card and spending on it every month and paying off in full will do far more for your credit history (what lenders actually use to rate you) and, FWIW, the gimmick score (that lenders never see) than cutting them up and never using them. I'd ask Cap One if they could combine the limits and close one account and then use them for small purchases. This is particularly important if one is a Visa and one Mastercard in case a service goes down.

Ebe_Scrooge

The above posters are correct - your score is meaningless, but your credit history is not.  Keeping a card open, using it occasionally and always repaying in full is one of the easiest ways to build up a good history.

But if you're wanting to improve your "credit-worthiness" (as viewed by a lender, not Experian), you really want to get that Bip balance cleared (as well as looking good on your credit history, it'll save you paying interest).  Using a credit card responsibly and always paying in full every month is viewed by lenders as a sign that you're good with credit and only borrow within your means.  Paying only the minimum each month is viewed as a sign of financial hardship.  Paying more than the minimum (as you say you're doing) is a little better, but if you're carrying a balance from month-to-month for any length of time, then this can also be interpreted as a sign of financial stress.  The quicker you can clear it, the quicker your "credit status" - if you want to call it that - will improve.

Fantomas01

Thanks for the advice, I realise the credit score is itself doesn’t mean anything…I probably should have said I want to improve my credit worthiness.  So, regardless of the actual number, does a score that is going up over the course of a few months actually mean ones credit worthiness is improving in general terms or does it have no bearing whatsoever?

The Bip card is next on the list, I just received a lump sum that covered the balance in the Capital One card so thought it best to get that down to £0.

Thanks again
Matthew

born_again

Fantomas01 said:

Thanks for the advice, I realise the credit score is itself doesn’t mean anything…I probably should have said I want to improve my credit worthiness.  So, regardless of the actual number, does a score that is going up over the course of a few months actually mean ones credit worthiness is improving in general terms or does it have no bearing whatsoever?

The Bip card is next on the list, I just received a lump sum that covered the balance in the Capital One card so thought it best to get that down to £0.

Thanks again
Matthew

Only thing lenders look at is your history & income to debt. They do not see your credit score & have no idea if it's going up or down.

Ebe_Scrooge

Fantomas01 said:

So, regardless of the actual number, does a score that is going up over the course of a few months actually mean ones credit worthiness is improving in general terms or does it have no bearing whatsoever?

It has no bearing whatsoever.  In general, it indicates stability, nothing more.  The score will drop in response to any change in credit circumstances, whether good or bad.  Open a new card - the score will drop.  Default on a loan - the score will drop.  Close an unused card - the score will drop.  Win the lottery, pay off your mortgage and sit pretty with a million quid in the bank and no debt - your score will drop.

Trundle along happily just using the cards you've got, paying your mortgage and loans on time every month, make no changes to your credit situation - your score will gradually rise.

[Deleted User]

I would combine the Capital One cards or if not possible get rid of the £200 credit limit one.