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    • rebmunns
    • By rebmunns 13th May 18, 5:44 PM
    • 2Posts
    • 0Thanks
    rebmunns
    First time buyer mortgage and credit cards
    • #1
    • 13th May 18, 5:44 PM
    First time buyer mortgage and credit cards 13th May 18 at 5:44 PM
    Hello!

    My husband and I are looking to buy a house this year.

    I have two credit cards, one with a limit of 11k and the other 6,250. I have had both credit cards for a long period (one since 2006 and the other since 2012) and whilst both cards have some balance on them (around 5k split between both cards), I have always paid them each month (although not always in full) and I have never defaulted on a payment. I've checked my credit rating which is in "excellent" according to both experian and equifax.

    Now, my question is this. Before we go to a mortgage broker, I want to pay both balances off in full. However, should I keep the cards open and continue to use them (although pay them off in full) each month, or should I close them both? If I keep them open, would the best option be to lower the credit limits? If so, what to? I've read that some lenders take see a large credit limit as a negative (even if it's not being used).

    Any advice much appreciated.
Page 1
    • sh856531
    • By sh856531 13th May 18, 5:56 PM
    • 400 Posts
    • 160 Thanks
    sh856531
    • #2
    • 13th May 18, 5:56 PM
    • #2
    • 13th May 18, 5:56 PM
    Hello!

    My husband and I are looking to buy a house this year.

    I have two credit cards, one with a limit of 11k and the other 6,250. I have had both credit cards for a long period (one since 2006 and the other since 2012) and whilst both cards have some balance on them (around 5k split between both cards), I have always paid them each month (although not always in full) and I have never defaulted on a payment. I've checked my credit rating which is in "excellent" according to both experian and equifax.

    Now, my question is this. Before we go to a mortgage broker, I want to pay both balances off in full. However, should I keep the cards open and continue to use them (although pay them off in full) each month, or should I close them both? If I keep them open, would the best option be to lower the credit limits? If so, what to? I've read that some lenders take see a large credit limit as a negative (even if it's not being used).

    Any advice much appreciated.
    Originally posted by rebmunns
    I can't say how big a difference this made but we saw anecdotal evidence that the amount of credit we had available to us was counting against us when enquiring about a mortgage

    I had a large amount of credit available to me across two credit cards - something like 13.5K available but I only used the cards for air miles. I naively thought this discipline would endear me to the lenders.

    Anyway - we got a fairly crap offer from Nationwide that the guys in the branch were surprised about given our credit history/income etc. Long story short - the only thing I could put it down to was the fact that I could go out at the drop of a hat and spend 13K on whatever at very short notice.

    I dropped the cards down to a collective 2.5K limit and reapplied for a mortgage some months later. It went straight through on a very competitive rate and the only difference would have been that available credit thing.

    This is all anecdotal of course. That said I would do the same thing again as you would want everything to be lined up in your favour.

    Good luck

    S
    • sh856531
    • By sh856531 13th May 18, 6:04 PM
    • 400 Posts
    • 160 Thanks
    sh856531
    • #3
    • 13th May 18, 6:04 PM
    • #3
    • 13th May 18, 6:04 PM
    I also meant to say - I kept both cards available though just with a lower limit on each, rather than fully close them down. I heard some advice saying that closing the cards down completely was harmful, though I never fully believed it. Their payment history would be on record for many years whether open or closed

    HTH

    S
    • rebmunns
    • By rebmunns 13th May 18, 6:45 PM
    • 2 Posts
    • 0 Thanks
    rebmunns
    • #4
    • 13th May 18, 6:45 PM
    • #4
    • 13th May 18, 6:45 PM
    Thanks so much for the reply. My husband's suggesting that maybe I close one of the cards completely but keep the other card open. Do you think that could be a good option, or do you think I should keep both with a lower limit considering I've had both for a long time?
    • kuratowski
    • By kuratowski 13th May 18, 6:47 PM
    • 22 Posts
    • 36 Thanks
    kuratowski
    • #5
    • 13th May 18, 6:47 PM
    • #5
    • 13th May 18, 6:47 PM
    The thing is what happens if the card gets lost or stolen, and you only have one. Or if the bank has an IT meltdown. You could be without a card for a few days. Provided you have the discipline not to spend money you don't have and always pay off the full statement balance, I would keep the two cards.
    Mortgage when started (July 2013): 325,000 | Current mortgage (May 2018): 275,000
    Total overpayments to date: 5160 | Mortgage free day: July 2038
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