Probably stupid money question

[AlexCabot]

Probably a stupid question but I'm a bit confused and need advice.

I've been in debt for my entire adult life and am now in a position to be debt free. I've got a plan to pay everything off in the next twelve months.

It's mostly consumer debt, so credit cards and catalogues. I've already paid off a couple of the smaller ones.

So, stupid question. When I've paid an account off, is it better to close it or keep it open?

In terms of my credit score, is it better to have lots of available unused credit or just a couple of accounts?

I'm intending to keep two of the cards open after I've paid them off.

Any advice gratefully appreciated!

P.S I'm using the debt pay off planner app which I saw mentioned on here. Thanks to whoever that was.

Have a couple of cards max, not lots, credit agencies are not going to be impressed because you have lots of empty credit cards.

I would close the ones you have aid off so far at least, reduce temptation

Thanks. I've closed the ones I've paid off so far so I'll keep doing it.

Not a stupid question. Credit ratings are dumb AF.

Pay the catalogues off and close them. Pay the cards off but keep one open. Spend money on it every month and clear the balance in full every month. No more than 1/3rd of your total credit card limit each month. Don’t go completely debt free and pay off and close all cards or never use a card. They like to see that you have credit and are using it responsibly.

In the short term, make sure you are paying a little bit more than the monthly required minimum payment on each credit card every month. That will help your rating pretty soon.

Oh and congrats on your plan and getting closer to debt free. It feels very liberating when you get there.

Thank you. It sounds silly but I'm ridiculously excited at the prospect of finally being debt free!

It's not silly at all, it's extremely exciting.

I had an overdraft of almost 6k by the age of 29 so I know how the prospect of lifelong debt feels.

I wouldn't close all the accounts. But nor would I leave them open and not use them. It seems that the credit reference agencies like to see people using credit properly, so just keep the store cards you think you may use and then when you buy something from that store, use their card, but pay off the balance in full the month after to avoid interest/charges. That way you're demonstrating to the credit reference agency that you can use credit wisely.