Clearing credit card effect on credit rating

edited 30 November -1 at 1:00AM in Credit File & Ratings
20 replies 1.7K views
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Replies

  • sparkey1sparkey1 Forumite
    444 Posts
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    adamz wrote: »
    As around £32000 of the balance paid was across 2 Barclaycard's, is there anyway to persuade Barclaycard to contact Experien to update details.

    Thanks

    They wont do individual requests. The system is automated. Wait six weeks.
  • adamzadamz Forumite
    11 Posts
    I will wait it seems - thanks

    But moving forward now the cards are more or less clear - would it be seen as a positive against my rating? Someone above mentioned cancelled a few of the cards to reduce my credit exposure. I will look at that later.

    To clarify I have a large amount of equity in my house, so released some of it to cover these cards. I know I will receive some feedback that this is not a good thing to do. But it was right for us.

    Thanks again all, any more advice much appreciated
  • madvickermadvicker Forumite
    156 Posts
    First Anniversary
    Having the cards cleared will be a positive. Though as I've mentioned, you have a large amount of available credit that you could potentially go and spend tomorrow - and that is a negative, hence my recommendation to cancel some of your cards (not all).

    As it seems unlikely you would get enough of a free limit to transfer all your CC debt to 0% deals, releasing equity to pay off the cards is fine provided: you overpay the mortgage to compensate. As the debt is now shifted to your house, although the interest rate is lower, the term is much longer so you could end up paying more interest on the debt as a result. But if you overpay, then it makes sense as your debt is now on a much lower interest rate than the credit cards.
  • sparkey1sparkey1 Forumite
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    Dont close your credit cards.

    1 It will potentially lower the average age of your cards.

    2 It will make your future credit utilisation look higher.

    3 Only ever cancel a credit card if it starts charging a fee.

    4 There is nothing wrong with the limits you have.

    5 Potential credit is not an issue. Urban myth In fact the more potential credit you have the better. Just dont use it, unless utilising 0% offers.
  • adamzadamz Forumite
    11 Posts
    Really helpful replies - thanks all so much.
  • adamzadamz Forumite
    11 Posts
    As an update having just checked my credit report with Experian it has improved dramatically after 2 of the 5 cards I have paid off have been updated on the report.

    I know the true meaning of the credit score is not necessarily that important according too some people on this site.

    However even if just a mental thing it is good news to me.
    I hope when the other cards are also updated this will help further.

    But a question - as I took a further mortgage advance to help clear the cards will an increased mortgage offset any gains made by card payment? I heard due to interest levels that credit cards are more likely to affect my credit rating than a mortgage balance.

    Any help would be much appreciated.
  • zx81zx81 Forumite
    33.2K Posts
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
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    Lenders will view your debt as a whole, taking into account your income and credit history.

    Interest bearing credit card debt implies a lack of disposable income more than an outstanding mortgage would.
  • adamzadamz Forumite
    11 Posts
    zx81 wrote: »
    Lenders will view your debt as a whole, taking into account your income and credit history.

    Interest bearing credit card debt implies a lack of disposable income more than an outstanding mortgage would.

    Thanks - Hoped that would be the case.
  • sparkey1sparkey1 Forumite
    444 Posts
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    Credit card debt, pound for pound is more damaging as mortgages are significantly cheaper than credit cards.

    Mortgages imply stability and can raise your credit scoring.
  • SystemSystem Forumite
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    adamz wrote: »
    Sorry - I was not clear. I have £60000 available credit (combined credit limits), was previously around £10000 available as I had a combined £50000 balance (across 5 cards). The total balances now sit at around £1500 which I have left for now.

    As around £32000 of the balance paid was across 2 Barclaycard's, is there anyway to persuade Barclaycard to contact Experien to update details. And will a picture of both cards more of less being paid off help my rating ?

    My nett monthly income is £4200.

    Thanks

    You said you consolidated your debt so you still have £50,000 of debt, it is just now that it is in the form of a loan instead of credit card debt. That is the same as your annual take home pay so the reason you've been denied further credit.

    There is only one way you're going to get credit and that's to actually pay down what you currently owe by a considerable amount. Now is the time you have to get used to only being able to buy what you actually have money on hand to do instead of taking out more finance.
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