Paying off which cards will improve credit rating quickest?

El_Paz

I suddenly have a bit of cash available to pay off some of my credit card debt and my first thought was to pay off the one with the highest interest rate.

But now im thinking that rather than pay off one big card balance I may improve my credit rating more by paying off a couple of the smaller ones?

Ive looked at my Experian report which only shows a couple of my cards on there, so should i just pay off these ones instead?

Ultimately i want to improve my rating with this repayment but im not sure which approach will have the most positive impact on my rating.

Any ideas?

JakeGreen

Just pay off the ones which are charging you the highest rate of interest first regardless of the outstanding balance.

[Deleted User]

As above, pay off the ones with the highest interest rate. This will save you the most money. I guess if you have particularly high utilisation (close to limit) on other cards then you could pay those off first but that will cost you more in interest.

spaceboy

Pay off the highest interest one first, then cancel the account.

El_Paz

Ok.

So there's no trick to improving my credit rating by paying off a card which already appears on the experian report over a bigger balance card which doesn't?

P

StuC75

If there is difference in Interest rates being charged, then its best for you to save money by reducing how much interest those debts cost to service.

Other cards may be recorded with different CRA's..

Its hard to confirm or deny whether such a 'trick' exists since all Lenders (Not CRA's) have different policies on credit scoring and how they decide there lending decisions..

As long as you are meeting the payment obligation on time then that is more appealing to other lenders (i.e. they want to see that they will make some money from you!).

Other than that your total debt will appear the same, whether its split as 1x£6k, 6x£k1, 2x£3k, 3x£2k etc...... It still equals the same amount of debt, and unless you close accounts the same % utilised (thats also a separate discussion as to whether its in best interest to close \ reduce credit limits)..

El_Paz wrote: »

Ok.

So there's no trick to improving my credit rating by paying off a card which already appears on the experian report over a bigger balance card which doesn't?

P

Experian_company_representative

Lots of good advice above already. There's some guidance on credit card utilisation and credit ratings in this Q&A. Hope it helps.

James Jones

The_Boss

spaceboy wrote: »

Pay off the highest interest one first, then cancel the account.

What if that one is not reported to the CRAs? How will that improve how lenders score them?

OP - if you want to improve your chances of getting credit then definitely pay off the ones that are reported first. Although a lender may still ask for the cards you have, the limit and credit used.

For saving money, the prior advice of paying off the highest interest rate first is accurate.