Is it worth closing CC's not being used..?

ferry

In view of the credit crunch or other economic reason ,I'm wondering if I'm best closing a CC account as its no longer being used.
Heres the facts..
I have an Egg card with a 6k limit,nil balance but dont really need it.
I have a Mint CC 0% for 12 months/8k limit carrying my 4k balance,no other debt..
Also,I have a mortgage thats due for review in a years time.
Thinking ahead should I close the Egg CC nearer the remortgage time to get my 'available credit' amount down which may help my mortgage application ..or is it best now that I have this CC and its limit kept open as a sort of emergency card(as it may not be available if the crunch tightens after I cancel it).
If I take this route is it best to have an occassional spend on it and clear it each month?
Confused!?
Many thanks for any advice as usual
F.

skyrider007

It depends on how many cards you have. You may want to get rid of ones that have low limit and high apr. Keep at least 2-3 CCs as you never know what might happen in the future.

ferry

skyrider007 wrote: »

It depends on how many cards you have. You may want to get rid of ones that have low limit and high apr. Keep at least 2-3 CCs as you never know what might happen in the future.

Thanks Skyrider I might therefore be better off keeping the card open(If Egg dont cancel it first!)It's the only other one I have.

Just worried about having an extra unused CC when remortgage time come round!

Ferry

Born2Save_3

The Wall Street Journal a few weeks ago had an article regarding improving your credit score and one of the no-no's was closing existing lines of credit to you. Basically if you close a credit card account your line of credit is reduced and, given you repay all your cards on time, closing a card would actually reduce your credit score.

The details are :

WSJ Personal Journal 22/4/08
Page D3 Quote "Don't close old Credit-Card accounts - in an attempt to improve your score. You'll lower your total available credit, which could damage your score"
Source : Fair Isaac, WSJ research

There was a lot of other good advice, but I won't reproduce that here.

This is significant to me as I have many lines of credit that I don't use and have though about closing in an attempt to improve my score but, ironically, it may well be that this would have completely the the opposite effect !

The WSJ information may well apply to America, but I am not ceratin if it applies to the UK credit models. The article quotes Fair Isaac's 2008 scoring model.

Any comments ?

ferry wrote: »

In view of the credit crunch or other economic reason ,I'm wondering if I'm best closing a CC account as its no longer being used.
Heres the facts..
I have an Egg card with a 6k limit,nil balance but dont really need it.
I have a Mint CC 0% for 12 months/8k limit carrying my 4k balance,no other debt..
Also,I have a mortgage thats due for review in a years time.
Thinking ahead should I close the Egg CC nearer the remortgage time to get my 'available credit' amount down which may help my mortgage application ..or is it best now that I have this CC and its limit kept open as a sort of emergency card(as it may not be available if the crunch tightens after I cancel it).
If I take this route is it best to have an occassional spend on it and clear it each month?
Confused!?
Many thanks for any advice as usual
F.

Clariman

In general, closing unused credit cards has a positive effect on your credit rating rather than a negative one. It is dangerous using credit scoring advice from the US because they do credit scoring differently to UK financial organisations. In the US lenders tend to buy the credit score provided by Fair Isaacs and use that. In the UK, lenders do their own credit scoring based on their own criteria and what they see in your credit history.

Returning to the question, it is difficult to give a black and white answer, because there are 2 conflicting criteria that UK lenders use. They look at your Total Available Credit and they look at the Percentage of Available Credit used.

The higher these figures are, then the more concerned a lender will get. Consider what happens when you close a card down. You reduce your Total Available Credit which is good, but you increase the Percentage Used which might be bad! Having spoken to a credit manager and a major Credit Reference Agency (on behalf of the stoozing website), the Total Available Credit is probably the more important of the criteria, so closing down cards is more often a good idea. The other reason to close them down is that it leaves you less open to any form of identity fraud because you have fewer statements etc that could get intercepted.

Clariman

Bismarck

I would certainly keep your card open and in infrequent use...you never know when you may need it...just don't think you need to use it too much!

ferry

Just been reading through the resposnses-many thanks for the good advice as always
Also I might consider reducing the available limit to say just £1500-£2000 to keep a 'happy balance' in terms of avaiable credit:T

Ferry

queen_of_leon

Clariman wrote: »

The other reason to close them down is that it leaves you less open to any form of identity fraud because you have fewer statements etc that could get intercepted.

Clariman

just paid off my egg card and was wondering the same thing. 'martin's tips' said it's a good idea to close them as if you need credit in the future they can offer you new customer rates. but saying that, i've seen posts of new rates being offered on existing cards, so it's a tough decision!?

however, i think the fraud risk is something that needs to be taken into consideration. and to be honest...i don't want to get myself into debt again. so i think i'll close the egg card and work my butt off to repay my mbna (currently at 0%) and then have nothing more to do with credit cards in the future!!