What best to do for my credit file

debtfreeinayear

Hi,

I have a question....

I have £1000 spare to allocate to some of my debts.. but am unsure which might be the best way to use it.

I have 4 small payday loans (totalling £1000) which are all on payment arrangements - therefore NO interest being paid, just the totals being reduced monthly by about £150. I also have an NRock loan which is 5 months in arrears - total of £1600. The Payday loans do not appear on my credit file and should be fully paid off in 3 months at this rate. My credit file is states my NRAM loan at 5 months in arrears and will continue to do so until I clear the arrears in full. (I had a payment plan in in place.. they initillially registered a default - which was then removed and now my loan is in a "to be cleared off asap" status). However at this rate my normal monthly istallments + an additional monthly amount means that the 5 months arrears will stay on the file until I pay off the loan in about 3.5 years or pay off the arrears in one lump sum - aftre whihc they will manually adjust my Credit file to show no arrears. They have also offered me an early settlement of £16000, I currently owe £22000 - if I can pay it off early. However if I take ( or could afford this option) it would be registered as a "part settlement" on my Credit file, so am not sure if this would have a detremental effect later on.. perhaps in a year or two if I try for a mortgage? My crdit score is in the low bracket but I'm on the road to getting this improved.

I would be grateful of any advice... should i pay off the niggly PDay loans finally or a lump sum of the NRam arrears... and how important is my credit file... ?



PS
I have cleared over half my debt in the last 3 years... I am determined to be debt free!

njk1012

I'm not sure which would be best for your credit score however I think it would be to put it on the loan.

From a psychological perspective I would in your position pay off the pay day loans as this would mean four more debts are gone leaving just one to pay albeit a big one. Plus once you have paid these off you could use the money you are currently paying on the smaller loans £150 a month to pay towards the larger loan on top of your regular payment?

As I said I'm not really the best person to reply and I'm sure someone more knowledgeable will come along soon with the right answer.