Should I close my credit card account?

wwfwilla

Hi there.

In a nutshell due to spending on essentials and other unexpected house/car bills popping up I have about £15,000 spread across four credit cards.
I notice when I get my monthly credit score that i'm marked down for using more than 50% of the available credit on a card (and sometimes more than 75%).

I'm managing with the debt through balance transfers and pay little to no interest while gradually reducing it.

My question revolves around a Capital One card that I have. They don't really do balance transfers (or not for my card) so I have a card that's sitting there 'dormant' as I never spend on it.
I'm wondering what the best action would be to improve my credit score?
a) Close the account so overall my file shows I have £3,000 less credit available.
b) Spend one transaction a month on it and pay it off in full to make it look like I manage my account/card well.
c) Leave it as it is so that its reported to credit agencies that i'm using less than 25% of this card's credit (which is apparently a plus).

Thanks for your help :)

la531983

d) ignore the made up number that no lender actually sees, and carry on as you are.

ManyWays

If you will need another 0% balance transfer and you have the will power not to spend on the card, then your best option is c).

Credit utilisation is calculated at a card level and also overall across all cards.

If you think you may be tempted to spend, then it is better to close the card. because running up a balance again harms your credit utilisation and also your affordability.

There is no need for b) as you are already making the minimum payments to the other cards. (When all your cards are clear, if you want to keep one to help your credit score, then it's a good idea to buy something small each month and repay in full by direct debit. But that isnt needed at the moment.)

It is true that lenders do not see the credit score you see. But most lenders have calculations that involve credit utilisation, so you can think of your credit score as a rough guess about what most lenders may see.

Brie

a) is the right answer in my opinion. The less credit you have available the less of a risk you are to a potential lender and that may open up the opportunity of getting a different balance transfer card at some point in the future.

Don't forget when considering your credit risk a bank will look at all the credit you use and/or have available. So that will include overdrafts, motor/house insurance paid monthly, broadband/mobile contracts. If you can tidy those up as you go along including reducing your overdraft you become a more desirable customer. Being married and registered to vote help too apparently.