Credit Cards

Applying for mortgage in 6-12 months. Should I close or restructure any cards?

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  • Jul 25th, 2018 12:56 pm
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Jun 27th, 2018 10:42 am
nicklol [OP]
Newbie
Oct 4, 2014
30 posts
22 upvotes
Bradford, ON

Jun 27th, 2018 10:42 am

Applying for mortgage in 6-12 months. Should I close or restructure any cards?

I'll admit I may have applied for some unnecessary cards recently and I am looking for advice on what I should keep open. Will there be any benefit to closing any cards now since I will be looking to apply for a mortgage in the next 6-12 months?

Oldest to newest credit products :

May 2007 - HSBC Gold Mastercard $1000 initial limit, never bothered to increase
Feb 2015 - Desjardins Visa $1000 initial limit
April 2016 - PC WE $5000
June 2016 - CIBC Dividend Visa $6500
Sept 2016 - CTFS Options $4500
Nov 2016 - CapOne Gold $5000
Nov 2017 - NBC Echo $1750
Dec 2017 - MBNA PP $8000

April 2018 - Simplii uLOC $5000

HSBC has an annual fee of $85. I am worried if they do a product switch that my tenure on the card will be lost. If anyone knows this answer, I would greatly appreciate it. CS over the phone did not sound confident that it would.

I am carrying a $3500 balance on MBNA (0% BT), all other cards have no balance.

PC WE is my go to card for every day purchases and bill payments, never carries a balance before statement is printed.

In regard to my credit rating, it is currently 724 through CK/Scotia/CapOne and 715 through Borrowell

I have a settled judgment (8k) from Oct 2012 which should fall off Equifax this October and TransUnion next year October 2019

Please advise on what you think I should do with the current cards I have; if restructuring in any way would help.

Thank you.
11 replies
Jun 27th, 2018 10:58 am
iwuzhere
Newbie
Jul 8, 2017
86 posts
60 upvotes

Jun 27th, 2018 10:58 am

It is generally recommended that you keep your oldest account open. You might consider asking HSBC for a product switch to a no-fee card. A product switch, if they allow it, should preserve the history of that account on your credit report. (It does with other banks.) Beyond that and paying down debt, I would suggest neither applying or closing any accounts.
+1
Jun 27th, 2018 11:10 am
Elfwood
Deal Addict
Oct 22, 2014
4386 posts
2735 upvotes
Toronto

Jun 27th, 2018 11:10 am

1) Pay off all outstanding balance
2) Discharge the uLOC
3) Close CC to lower your total credit limit, starting with your newest cards - don't close your oldest 2-3 cards. Keep total credit limit about 10-15% of your gross annual income.
4) Don't apply for new CC for 1 year prior to your mortgage.
5) If you have time and energy, request the settled judgment to be removed from your TU & EQ asap. This will help your credit score.
Jun 27th, 2018 11:17 am
coolintheshade
Deal Fanatic
Aug 24, 2016
9500 posts
10791 upvotes
The Prairies

Jun 27th, 2018 11:17 am

Why on earth would you get a Cap1 Gold card after your credit is already established?
That card has a $59 AF and no rewards, and it geared towards credit challenged individuals.
All your other cards obtained previously blow that card out of the water.
Normally I would say don’t cancel any, just leave it be, but you really don’t need that Cap1 card, or is there something I’m missing?
As for the judgement, it should come off both bureaus this October.
Why would you think it stays on TU a year longer?
+1
Jun 27th, 2018 11:52 am
nicklol [OP]
Newbie
Oct 4, 2014
30 posts
22 upvotes
Bradford, ON

Jun 27th, 2018 11:52 am

coolintheshade wrote: ↑ Why on earth would you get a Cap1 Gold card after your credit is already established?
That card has a $59 AF and no rewards, and it geared towards credit challenged individuals.
All your other cards obtained previously blow that card out of the water.
Normally I would say don’t cancel any, just leave it be, but you really don’t need that Cap1 card, or is there something I’m missing?
As for the judgement, it should come off both bureaus this October.
Why would you think it stays on TU a year longer?
Hello and thank you all for the replies so far.

I must have completely missed the annual fee on the Capital One card, my mistake. It would be wise to close it?

From what I have read, Equifax removes public records (judgments) 6 years from date filed, Transunion is 7 years. I should note that I am in Ontario. This is a quote from Transunion directly
JUDGMENTS:
TransUnion maintains this information on your file for the maximum length of time permitted by provincial credit reporting legislation.
TransUnion maintains this information as follows:
BC, YK, NWT, NU, AB, SK, MB, NS- six (6) years from the date of judgment
ON, PQ, NB, & NL- seven (7) years from the date of judgment
PEI- ten (10) years from the date of judgment
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Jun 27th, 2018 12:28 pm
coolintheshade
Deal Fanatic
Aug 24, 2016
9500 posts
10791 upvotes
The Prairies

Jun 27th, 2018 12:28 pm

nicklol wrote: ↑ Hello and thank you all for the replies so far.

I must have completely missed the annual fee on the Capital One card, my mistake. It would be wise to close it?

From what I have read, Equifax removes public records (judgments) 6 years from date filed, Transunion is 7 years. I should note that I am in Ontario. This is a quote from Transunion directly
Yes you’re correct, my apologies.
It’s collections accounts that are the same regardless of province.
Legal judgements are province dependant, and vary by province.
+1
Jul 25th, 2018 11:27 am
Nauth
Deal Addict
Jan 1, 2009
1081 posts
582 upvotes

Jul 25th, 2018 11:27 am

Elfwood wrote: ↑ 1) Pay off all outstanding balance
2) Discharge the uLOC
3) Close CC to lower your total credit limit, starting with your newest cards - don't close your oldest 2-3 cards. Keep total credit limit about 10-15% of your gross annual income.
4) Don't apply for new CC for 1 year prior to your mortgage.
5) If you have time and energy, request the settled judgment to be removed from your TU & EQ asap. This will help your credit score.
Hi nicklol,

I agree with Elfwood, follow that and you'll be good.
When applying for a mortgage you don't want to give a lender a reason to deny you, A lenders are stricter than B lenders when it comes to credit history, rating, and ratios doing what elfwood suggest would dramatically look positive when the lender reviews your mortgage application. I can say we pull equifax credit report to determine credit rating but a lender can and will pull both if they choose to. Remember they want to eliminate as much uncertainty as possible. With Elfwood suggestions the ratios we use to pre-qualify you looks at your debts, assets and income, less debt you have on the books and the more assets you have the easier it is to pass the stress test for the ratios. PM further if you need any other questions answered.
Last edited by Nauth on Jul 25th, 2018 12:24 pm, edited 1 time in total.
Jul 25th, 2018 12:12 pm
Poutinesauce
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Aug 29, 2012
8756 posts
8493 upvotes

Jul 25th, 2018 12:12 pm

should-i-accept-credit-card-limit-increase-1814031/

According to this thread, it's not necessary to lower your credit card limits that much... they only calculate like 2-4% of your total available credit limit as ongoing expenses... this is a mortgage agent that worked with all lenders who said this, and others too
Jul 25th, 2018 12:15 pm
Elfwood
Deal Addict
Oct 22, 2014
4386 posts
2735 upvotes
Toronto

Jul 25th, 2018 12:15 pm

Believe what you want. Keeping too much total available credit card limit and holding too much unused uLOC or unused secured LOC (too much relative to your income + asset) negatively affects your Debt-Servicing Ratio - and can actually prevent you from getting any mortgage.
+2
Jul 25th, 2018 12:41 pm
batcave
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Nov 14, 2003
5873 posts
4417 upvotes
LaLaLand

Jul 25th, 2018 12:41 pm

Talk to the lender you are getting your mortgage from. They will tell you for sure.
Jul 25th, 2018 12:43 pm
terracotta92
Deal Addict
Feb 6, 2018
1471 posts
1225 upvotes

Jul 25th, 2018 12:43 pm

Elfwood wrote: ↑ Believe what you want. Keeping too much total available credit card limit and holding too much unused uLOC or unused secured LOC (too much relative to your income + asset) negatively affects your Debt-Servicing Ratio - and can actually prevent you from getting any mortgage.
+1. i tried to get an increase for my uLOC but got denied because i have a lot of cards that has a limit above 10k. factored in and it affected the debt servicing ratio, therefore denied of more credit. what more for a mortgage, which is much stricter.
Jul 25th, 2018 12:56 pm
mech9t5
Deal Fanatic
Dec 16, 2005
6424 posts
4631 upvotes

Jul 25th, 2018 12:56 pm

Instead of cancelling cards to lower available credit, you can considering reducing the limit on cards you don't use but want to keep for age.

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