Credit Cards and Credit Score

Financial Chat
#1

Hey Folks!

So looking for a bit of general advice. I currently have 4 credit cards, 2 of which I only spend the odd couple of £ on and pay it off to keep the card ‘active’. Now I hardly use these 2 cards because I only used them as credit building cards a few years back and my 2 newer ones have much better limits and interest rates. My question is this - am I better cancelling these or keeping them? I have heard that it is better to keep older credit accounts open as it increases credit scores and that closing a credit account that has a long history will reduce scores.

Thanks :+1:

#2

I’ve read that having a credit card more than 5 years helps your credit score as does having credit that you don’t use. But remember a credit score is entirely fictitious and lenders base it on the report. Each lender will have different criteria they use so it will vary what they look for

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#3
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#4

It is a big myth about the number of accounts you have, having any real affect. It’s your risk that companies look at. 10 cards with £1000 available shows no higher risk that 2 cards with £5000 on each. They see a total available rather than individual breakdowns. If you have £0 used, you still technically have £10000 available and they will see the £10000 available as well as the percentage you have utilised.

#5

I have a perfect credit score with one of the agencies, and have no credit cards, and haven’t had any for about 20 years…

#6

Open overdraft on one account? Or from having a phone contract paid on time etc?

#7

TBH I’m not sure it’s Experian and I’m too lazy to go through the rigmarole of seeing my full credit report. No phone contract. 2 small unused overdrafts.

#8

Generally lenders like to see less than 50% of your available credit utilised.

Month to month I have between £25-30k on credit cards and still have a very good score and no problems obtaining credit. My plan in 2019 is to clear them though as it’s a bit wasteful really.

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#9

Keep them open, credit rating companies love older cards. Also, Experian defaults you to the max score of 999 - although if someone looks at your report and you have absolutely nothing on it, a perfect score of 999 isn’t good enough.

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#10

I would suggest you do. It’s free and could be quite eye opening.

You can view your Equifax report via Clearscore, your Experian one through MoneySavingExpert Credit Club and your TransUnion (formerly Callcredit) through Noddle.

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#11

On this subject, I’ve had a refund processed on my AMEX. What would happen to my credit score/credit report if AMEX posted that I’m in credit on a credit card?