Zero-balance Credit Cards
Discussion
Do zero-balance credit cards have a negative effect on your credit score or credit worthiness? Or, more accurately - will having a large available credit pool cause lenders to say no?
I've looked around the net but come to no real consensus yay or nay. Some people say it shows that you're a good credit prospect and can handle money well, others say it puts the willies up the credit firms because you could go rogue, max out all your balances and do a Reggie Perrin with the proceeds.
I'm tempted to phone up the various banks and cancel them off, however I don't want to cut my nose off to spite my face (so to speak) if it means obtaining credit in future if required is going to be more difficult.
I've looked around the net but come to no real consensus yay or nay. Some people say it shows that you're a good credit prospect and can handle money well, others say it puts the willies up the credit firms because you could go rogue, max out all your balances and do a Reggie Perrin with the proceeds.
I'm tempted to phone up the various banks and cancel them off, however I don't want to cut my nose off to spite my face (so to speak) if it means obtaining credit in future if required is going to be more difficult.
If a lender asked me that question - I'd say that although the credit was available, the use of it would be prohibitive due to APR, hence shopping around for better deals from lenders.
In reality though, all of the times I've applied for credit, it has been on a computer says yes, or computer says no basis. I've never had to state my case and never had a lender query my personal circumstances. This is why I've asked the question as even on here there are conflicting opinions!
Some say that it does, some say it doesn't... Could it be classed as irresponsible lending by affording credit to people with a large amount of credit already available to them? If that person then went rogue, maxed everything and skipped the country (for example), would it be down to the lender to explain why?
Conversely, if someone was using 95% of their available credit - even if it was only £950/£1000 - would it be irresponsible of the lender to afford that person more credit being that they're already at their max and they're essentially being given a bigger hole to climb into?
At the minute, I'm probably using less than 5% of my available credit, so I think once it is cleared out completely, I'll close off some of the more pointless cards (ie ones with low limits, or ones that don't give anything back for using them) and just keep hold of the high-limit and loyalty cards to use in case of emergency or for online purchases etc.
In reality though, all of the times I've applied for credit, it has been on a computer says yes, or computer says no basis. I've never had to state my case and never had a lender query my personal circumstances. This is why I've asked the question as even on here there are conflicting opinions!
Some say that it does, some say it doesn't... Could it be classed as irresponsible lending by affording credit to people with a large amount of credit already available to them? If that person then went rogue, maxed everything and skipped the country (for example), would it be down to the lender to explain why?
Conversely, if someone was using 95% of their available credit - even if it was only £950/£1000 - would it be irresponsible of the lender to afford that person more credit being that they're already at their max and they're essentially being given a bigger hole to climb into?
At the minute, I'm probably using less than 5% of my available credit, so I think once it is cleared out completely, I'll close off some of the more pointless cards (ie ones with low limits, or ones that don't give anything back for using them) and just keep hold of the high-limit and loyalty cards to use in case of emergency or for online purchases etc.
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