Sorting out credit cards & credit rating

ellymoo

I'm unemployed currently, struggling and have built up a £5k c/c debt. I've done the sensible thing and moved the debt to an interest-free card. But my credit rating has understandably slipped. I would normally cancel the cards I'm no longer using, but I've read that that actually reduces the amount of credit available to me and will make my credit rating lower. So now I am confused. Any advice on what best to do would be gratefully received. Thank you!

TheSpectator

ellymoo said:

I'm unemployed currently, struggling and have built up a £5k c/c debt. I've done the sensible thing and moved the debt to an interest-free card. But my credit rating has understandably slipped. I would normally cancel the cards I'm no longer using, but I've read that that actually reduces the amount of credit available to me and will make my credit rating lower. So now I am confused. Any advice on what best to do would be gratefully received. Thank you!

Do you mean your fictional credit score has dropped when you say credit rating slipped. You can safely ignore that.

CliveOfIndia

As above, you can safely ignore the meaningless credit score dished out by the CRAs, as well as their assessment of your overall "credit-worthiness".  A lender will look at the raw data contained in your credit file and perform their own assessment.

As long as you're meeting your contractual repayments, that's the most important thing.

Credit utilisation ratio is largely irrelevant, despite what the CRAs would like you to believe.  If you always repay your cards in full every month, it makes no difference at all how much you're using.  If, as in your case, you've got a 0% promotional rate in force, then this is flagged as such on your credit report, so again it really doesn't matter.

The only time it really becomes an issue is if you're carrying a debt from month to month on an interest-bearing card.

ellymoo said:

Any advice on what best to do would be gratefully received. Thank you!

There are just two things you need to do.  First, make sure you make at least the minimum payment every month, on time.  Second, make sure you have money put aside to repay the balance in full when the promotional rate expires.  You may be able to transfer any remaining balance to another card, but this is by no means guaranteed, so it's not wise to just assume you'll be able to do so.

Oh, and don't use the BT card for spending.  With a few rare exceptions, this will result in you being charged interest unless you clear the next statement in full.

ellymoo

Thank you very much both of you. I want to close both unused cards really and get some control back to my life, so I feel comfortable doing that now.