Close account or pay extra on loan

foolishqueen

Hello All,

Long time lurker, very irregular poster. But I have a quick question if I may:

I have a Cahoot bank account that I don't use, it is overdrawn by £226 (with £126 being charged around 9%) and costs me about £2/3 a month in interest. I also have a Cahoot Flexible loan at about £8550 (limit £8750 :mad: ).

I get promoted in November, from which point I will be thinking seriously about buying a house, so I want my credit file to be the best it can be (considering all my debt!).

So do:

1. Pay of Cahoot bank account balance and close it - one less open credit account?

2. Pay off a bit extra on my Cahoot loan with th emoney I would close the bank account with?

Any suggestions greatly recieevd.

Cheers.

rchrisp

whats the interest on the loan? i think i'd probably pay off the unused account as like you say its one less thing sitting there accumulating interest.

foolishqueen

Interest on account is 9.8% and loan is 9.1%....I guess what I'm really interested in is in what looks better on your credit file - a closed account or a margianlly reduced loan balance? Thanks.

CLAPTON

buying a house
important things:

positives:
size of deposit
size of salary
stability of employment

negatives
bad credit records (late payments, defaults, CCJs)
size of debts

lynzpower

look closely. I dont think you can close the cahoot current account if you have the loan account open. My OH has one and hes been considering doing the same.

I expect closing the account would be better, if you can do so.

foolishqueen

Hi Lynzpower,

I didn't realsie that - will have to look atthe T&Cs closely. I pay the DD form mymain bank account as I don't use teh Cahoot one. Will let you know what I find.

Cheers.