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  • FIRST POST
    • scott9678
    • By scott9678 14th Jun 19, 12:42 PM
    • 25Posts
    • 503Thanks
    scott9678
    Close An Account?
    • #1
    • 14th Jun 19, 12:42 PM
    Close An Account? 14th Jun 19 at 12:42 PM
    Apologies first as I'm certain this will have been asked before but here goes.

    I've just got one of the 3 cards I have to zero balance (4000 limit). My question is, is the best thing to do to now close this account? I am sure I have read somewhere that this will have a negative effect on my credit score as it will reduce my available credit, thus meaning my actual % of balance to credit limit will go up?

    I have about 5,000 available left on my everyday card and another one which was used for a balance transfer which has around 3,000 available, although I have no intention of using this for any purchases.

    (Again I have no intention of using the card I have paid off and have already cut the card up).

    Thanks
Page 1
    • zx81
    • By zx81 14th Jun 19, 12:44 PM
    • 23,829 Posts
    • 26,493 Thanks
    zx81
    • #2
    • 14th Jun 19, 12:44 PM
    • #2
    • 14th Jun 19, 12:44 PM
    Your limits are fairly low, so I would keep them all. Show lenders that you are trusted with credit.

    No one will be looking at your credit score - just how you manage your accounts.
    • 18cc
    • By 18cc 14th Jun 19, 1:44 PM
    • 1,834 Posts
    • 1,351 Thanks
    18cc
    • #3
    • 14th Jun 19, 1:44 PM
    • #3
    • 14th Jun 19, 1:44 PM
    It is a matter of individual preference but for me if I definitely wasn't going to use the card again I would close it
    • PRAISETHESUN
    • By PRAISETHESUN 14th Jun 19, 3:02 PM
    • 1,282 Posts
    • 696 Thanks
    PRAISETHESUN
    • #4
    • 14th Jun 19, 3:02 PM
    • #4
    • 14th Jun 19, 3:02 PM
    Personally I'd keep them open - it's always useful to have access to a large credit limit in an emergency and you may not be guaranteed to be offered it again. That said, if you feel you may be tempted to spend and run up expensive debt again then by all means close the account. Lenders typically like to see stability so accounts which are open for a longer period of time are usually viewed more favourably. Additionally, by closing the account you will be reducing your total available credit and increasing the % utilisation of the credit that remains - both of these are typically viewed poorly by lenders.
    • Ben8282
    • By Ben8282 14th Jun 19, 6:37 PM
    • 3,544 Posts
    • 1,957 Thanks
    Ben8282
    • #5
    • 14th Jun 19, 6:37 PM
    • #5
    • 14th Jun 19, 6:37 PM
    Forget about your credit score. The only thing that is important is your ability to get credit which is in no way related to the CRA credit scores.
    You speak of available credit but don't mention balances or total credit limits.
    Cutting the card up was rather foolish . Why did you do it?
    You are correct in that reducing your credit limits thus increasing the utilisation % will have a negative effect on your future ability to obtain credit.
    • MrNoble
    • By MrNoble 18th Jun 19, 8:20 PM
    • 3 Posts
    • 0 Thanks
    MrNoble
    • #6
    • 18th Jun 19, 8:20 PM
    • #6
    • 18th Jun 19, 8:20 PM
    Keep cards open, put a packet of chewing gum or tank of fuel on them and clear within the month.

    Say if you had 30,000 available credit over 3 cards 10,000 owed still on one, then cancelled one with a 10,000 limit but 0 balance.

    Your credit utilization would shoot up from 30ish% to 50% making you look a bigger risk to lenders, even though you were being reaponsible by removing the opportunity to take on more 'debt'
    • stehouk
    • By stehouk 19th Jun 19, 10:42 AM
    • 278 Posts
    • 117 Thanks
    stehouk
    • #7
    • 19th Jun 19, 10:42 AM
    • #7
    • 19th Jun 19, 10:42 AM
    If you close the account when the 0% period has finished doesn't that give you more options in the future to re-apply as a new customer and gain another offer ?
    I've just closed 2 accounts and will close 2 more next month, i am left with 3 cards that i am using but fully intend to re-apply when my 0% has finished.
    • adindas
    • By adindas 19th Jun 19, 11:15 AM
    • 4,158 Posts
    • 2,632 Thanks
    adindas
    • #8
    • 19th Jun 19, 11:15 AM
    • #8
    • 19th Jun 19, 11:15 AM
    If you close the account when the 0% period has finished doesn't that give you more options in the future to re-apply as a new customer and gain another offer ?
    I've just closed 2 accounts and will close 2 more next month, i am left with 3 cards that i am using but fully intend to re-apply when my 0% has finished.
    Originally posted by stehouk
    Good point if you already have many credit cards and reasonable limit but not if you have not got at least two credit cards (say).

    You cancel any card that you are 100% you will never need it for foreseeable future. But this is the hardest thing to know.
    • MisterBaxter
    • By MisterBaxter 19th Jun 19, 2:11 PM
    • 653 Posts
    • 456 Thanks
    MisterBaxter
    • #9
    • 19th Jun 19, 2:11 PM
    • #9
    • 19th Jun 19, 2:11 PM
    The only danger (besides temptation) of keeping too many cards open is that you need to make sure you check the statements on a regular basis just to be sure there hasn't been any fraudulent activity.

    It used to be easier to close a card with a particular issuer and then apply for a new card with offers/rewards with the same issuer but the offers/rewards aren't quite what they used to be and many issuers now seem a longer wait period before you can apply again and still get the offers/rewards.
    • MisterBaxter
    • By MisterBaxter 19th Jun 19, 2:20 PM
    • 653 Posts
    • 456 Thanks
    MisterBaxter
    Keep cards open, put a packet of chewing gum or tank of fuel on them and clear within the month.

    Say if you had 30,000 available credit over 3 cards 10,000 owed still on one, then cancelled one with a 10,000 limit but 0 balance.

    Your credit utilization would shoot up from 30ish% to 50% making you look a bigger risk to lenders, even though you were being reaponsible by removing the opportunity to take on more 'debt'
    Originally posted by MrNoble
    Do UK card issuers look at this in the same way as they seem to in the US or are they more interested in your liabilities against your declared income with factors such as payment history being factored in. I know in the US utilisation accounts for around 15% (I think) of the FICO score.

    As an example, I went for a very long time without any credit cards with my only debt being my mortgage (paid on time with no red markers). The only cards I could get at that time were credit builders with a low limit (500), I regularly had 90%+ utilisation on the card at time of reporting to the CRA but paid it off each month in full, some months I had to make a mid-month payment because the limit was so low. After a relatively short time, I was able to get pretty much any card I wanted so this high utilisation didn't seem to be much of a barrier.
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