Credit usage

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roopydoopy
roopydoopy Posts: 3 Newbie
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edited 19 January 2020 at 5:50PM in Credit cards
I have been accepted for a 0% for 2 years credit card. I will pay off 2 existing cards which are higher interest, around 21%. Should I cancel the 2 cards I am paying off, or keep them. Since there will be a zero balance on both cards, will this give me a better rating in view of a higher availability (or a lower use of) credit? Therefore leading to a better overall credit score.

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  • wiseonesomeofthetime
    wiseonesomeofthetime Posts: 2,081 Forumite
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    Personally, I would keep them if you are confident that you will not be tempted to use them again without PAYING IN FULL at the end of the month.

    The longevity of accounts is considered in credit history, as well as credit utilisation.

    If you are likely to incur further debt on them, I would get rid of them to avoid temptation.
  • Ben8282
    Ben8282 Posts: 4,821 Forumite
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    A better rating and a better overall credit score for what purpose exactly\/ You appear to have not encountered any difficulties in obtaining a 20 month 0% balance transfer card with a sufficient credit limit to transfer the balances of the other two cards, so it doesn't kook to me as if there is very much wrong with your ability to obtain credit
    As for if you should cancel the cards or not, you appear to have approached this question from the better rating/better credit score point of view without giving ay consideration to other valid factors in this decision. It is not a question that can be answered with the limited information you have given. .
  • roopydoopy
    roopydoopy Posts: 3 Newbie
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    Ben8282 wrote: »
    A better rating and a better overall credit score for what purpose exactly\/ You appear to have not encountered any difficulties in obtaining a 20 month 0% balance transfer card with a sufficient credit limit to transfer the balances of the other two cards, so it doesn't kook to me as if there is very much wrong with your ability to obtain credit
    As for if you should cancel the cards or not, you appear to have approached this question from the better rating/better credit score point of view without giving ay consideration to other valid factors in this decision. It is not a question that can be answered with the limited information you have given. .

    I am pro active in my approach to my credit file, so therefore, any change I make which may impact on my score is of interest to me. There are no other relevant factors beyond the question I raised.Thank you for your input.
  • MovingForwards
    MovingForwards Posts: 16,925 Forumite
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    Credit score is just for fun and not used in the UK by any financial institutions, they have their own way of credit scoring.

    What is taken into account by financial institutions is how you manage your accounts, make sure they are paid on time etc.
    Mortgage started 2020, aiming to clear it in 2026.
  • Ben8282
    Ben8282 Posts: 4,821 Forumite
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    roopydoopy wrote: »
    I am pro active in my approach to my credit file, so therefore, any change I make which may impact on my score is of interest to me. There are no other relevant factors beyond the question I raised.Thank you for your input.
    Of course there are relevant factors beyond the question you asked.
    From a practical point of view ignoring the credit rating/credit score question completely:
    How many credit cards do you have in total?
    If you cancel these two cards, will this leave you with just one card? If yes, does this card also have a 0% purchases offer and sufficient credit limit to use it for day to day purchases without paying interest? If no, you will be leaving yourself with no other credit card for use on a day to day basis without being charged interest on transactions.
    Do either of these cards have regular 0% existing customer offers that could benefit you in the future?
    Do either of these cards have any special facilities such as 0% FX or rewards that could be of use to you in the future?

    FYI your credit score is a meaningless number seen by nobody except yourself used by whoever is providing this score to you for marketing purposes, usually by convincing you to take out various financial products that they will recommend and receive a financial incentive when you do so, for the purpose of improving the meaningless 'for amusement only' number.
  • roopydoopy
    roopydoopy Posts: 3 Newbie
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    Thanks for that. Yes I can see the reason for all the credit report sites. They all want to help you manage your credit file, at the same time, trying to get you to take out more credit!! Even Equifax are at it. I think I shall close the 2 accounts. Although it will reduce my available credit ratio, it will also show 2 cleared balances.
  • Terry_Towelling
    Terry_Towelling Posts: 2,279 Forumite
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    Is the 0% rate applicable to Balance Transfers and new purchases too? If not, you may want to keep the paid-off cards just in case you need other access to credit. Just remember, if you do use the paid-off cards for more spending, then pay them off in full after each statement.
  • abc.xyz
    abc.xyz Posts: 107 Forumite
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    Leave the accounts open. Keep one for emergencies and cut the other one up. Aged accounts are positive for your report/history.
  • sadiedoll
    sadiedoll Posts: 132 Forumite
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    I've just been in a similar position - a couple of old cards which are paid off, but terrible interest rates. As it is January, I went through all the deals available, checked my credit files, and used the eligibility checker (along with checkers on individual lender websites).

    This is the approach I've taken:

    -Keep oldest card (6 years), 2k limit/£0 balance - use it to pay Netflix/Prime subscriptions and clear in full
    -Keep next oldest card (5 years), 2k limit/£0 balance - good deal on foreign transactions, so use for holidays/travel and clear in full
    -Cancel card held for 2 years, small limit and poor interest rate

    I now also hold:

    - 0% Purchases card/£0 borrowing at present
    - 0% Balance Transfer Card, being paid down at set percentage to clear by the end of the interest
    free period
    - Rewards card for monthly spending, set to clear in full

    This gives me a variety of options, and I also have backup cards in case of emergency. I wouldn't feel comfortable having only 1 or 2 cards, especially if they are the same type (I was in the Scottish Highlands a couple of years ago, and the Visa network had a total outage - didn't have my Mastercard with me! Awkward). I hold 5 cards in total, but i don't think that's excessive.
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