Closing Credit Card Account

Jono8 · 27 Feb 2013 at 16:12

I've just closed a credit card account (0 balance,nothing owed e.t.c) simply because i did not need it anymore, and instead wanted to open a new account that gave better rewards/points e.t.c.

I have one other credit card that has a balance on it (1k) simply because it is still within the 0% on purchases promotional period and I thought I may as well earn interest (not much obviously.. but still) on that money before having to pay it back (which i can do at any time easily).

Now, i just did some reading about credit scores e.t.c and read that closing my other account today may have been a stupid thing to do and actually would have harmed my credit score.

Is that right? If so, do you think it would have done much harm or would it be negligible?

I only did it because i didnt want too many cards to keep track off ( i thought more cards was a bad thing).

I am not very well versed on credit scores and the like so anyone who know more, can they tell me if i have done a boo boo this morning by closing that account?

scorchisio · 27 Feb 2013 at 16:15

It will boost your credit score by showing you have less items of credit and therefore will be in less debt. Closing a credit card with a 0 balance does not have a negative impact but a positive one.

Jono8 · 27 Feb 2013 at 16:18

scorchisio said:
It will boost your credit score by showing you have less items of credit and therefore will be in less debt. Closing a credit card with a 0 balance does not have a negative impact but a positive one.

You see this is what i thought, but i read that due to me having a balance on another card, the percentage of "used credit" has now dropped as I only have the credit limit of the other card in total now. This can apparently hit your credit score.

I am going to be really annoyed if this is true because i might potentially be applying for a mortgage in the summer :mad:

scorchisio · 27 Feb 2013 at 16:22

do not worry in the slightest about it, ( coming from a guy who has worked in finance for the last 2 years dealing with lots of credit files all day long)

This will not harm any mortgage applications whatsoever your worrying about nothing. Forget about it.

crinkleshoes · 27 Feb 2013 at 17:02

scorchisio said:
It will boost your credit score by showing you have less items of credit and therefore will be in less debt. Closing a credit card with a 0 balance does not have a negative impact but a positive one.

That's wrong.

Some credit card companies won't even let you open a new account with them if you've previously closed one you had with them - even if you never missed a payment and paid it off in full.

The way to improve your credit score is to have credit available to you that you have chosen not to use. It demonstrates your responsibility, apparently.

It's better to keep multiple credit accounts open with a 0 balance than close them down.

Jono8 said:
You see this is what i thought, but i read that due to me having a balance on another card, the percentage of "used credit" has now dropped as I only have the credit limit of the other card in total now. This can apparently hit your credit score.

I am going to be really annoyed if this is true because i might potentially be applying for a mortgage in the summer

That's how I've seen it work.

But mortgage apps work a bit different, so hopefully it won't have drastically affected that for you.

teenwolf · 27 Feb 2013 at 17:04

just keep the credit card open it will look better on your credit report.

Jono8 · 27 Feb 2013 at 17:08

teenwolf said:
just keep the credit card open it will look better on your credit report.

Already closed it.

Lol well this has proved conclusive. If i open another credit card account with a similar credit limit, will i be back to square one with no affect?

scorchisio · 27 Feb 2013 at 17:12

hes closed the account so whats the point in making him feel like he has made a bad decision and worry about it when its insignificant in the grand scheme of things. Its not going to have any impact on him.

scorchisio · 27 Feb 2013 at 17:13

opening another card will leave a footprint on your file as a credit search will be done on you during the application process, Just move on with your life and forget about it, its no big deal.

Jono8 · 27 Feb 2013 at 17:14

scorchisio said:
hes closed the account so whats the point in making him feel like he has made a bad decision and worry about it when its insignificant in the grand scheme of things. Its not going to have any impact on him.

I am only really bothered if it is going to make any difference to future mortgage applications. I dont care if my credit rating has dropped an insiginificant amount or anything like that.

AFK_Matrix · 27 Feb 2013 at 17:15

And if your still worrying about it go to each of the CRA's and buy the £2 statutory credit report. Check everything is ok on there, ie no defualts, address is right, your on the electrol roll etc. If everything is fine then stop worrying about it.

crinkleshoes · 27 Feb 2013 at 17:23

Jono8 said:
I am only really bothered if it is going to make any difference to future mortgage applications. I dont care if my credit rating has dropped an insiginificant amount or anything like that.

Shouldn't have anything to worry about.

If you're planning to arrange the mortgage within 6 months, I would not open a new account.

If it's going to be more than 6 months, personally - I would open another with a similar limit.

Jono8 · 27 Feb 2013 at 17:30

AFK_Matrix said:
And if your still worrying about it go to each of the CRA's and buy the £2 statutory credit report. Check everything is ok on there, ie no defualts, address is right, your on the electrol roll etc. If everything is fine then stop worrying about it.

Well i assume everything is ok. Ive had two credit cards, a small car and bank loan over the last 3/4 years and never missed payment/everything paid off. Never paid a penny of interest on either credit card either so i assume my credit score must be ok.