Advice on best way to pay off bills

Legacy_user

Hi all. I recently found myself in a credit card an payday loan trap which I tried long and hard to control and get out of. I was capable of getting out of it with my income but it seemed like every time that opportunity came something went wrong in my life and I ended up using the money else where and not achieving that goal. It got so bad that my credit score reached an all time low and I predicted nothing would change for at least another 4 months.

Cue generous and helpful family members.

They have given me a chance to restart my life financially and otherwise with a manageable interest free payment plan within 2 years where I can get my life on track and not make the same mistakes again. It is a large amount of money.

What I would like to know is how should I handle paying off my four credit cards. They total to about £5000.
And then cleaning up my credit profile in terms of phone contracts etc and direct debits..... should I pay it all in one go on a single day and make it obvious on my credit file that I received major financial help or should I pay off and close one account a month?
The aim is to get myself a mortgage in the next year or two and I'm just wondering if closing up to 8 accounts on my credit file in one month will be more detrimental.
Thanks if you can help.

[Deleted User]

Pay them off in order of highest to lowest rate, if it is not enough to clear them all. Do this as soon as yoy can so as to stop incurring interest.

If you have the discipline, continue to use one or two regularly and pay off in full each month. If you haven't, then cut them up and and close them all. However, this will mean you'll have a lack of decent history when it comes to applying for a mortgage.

System

Hi. Somehow I was hoping for a lot of responses at that time in the morning.
It looks like the plan is to just just pay everything off ASAP and keep one card to use and pay off as you suggested.
Hopefully it will do more good than bad.

Claree__x

Paying off everything asap makes most sense, particularly if there is interest being added or defaults.

If you don't have enough to pay off everything in one go then pay those which are in default first then those with highest interest.

In terms of rebuilding your credit file - using a credit card and paying in full each month helps, as does an on going mobile phone contract - basically just anything that is paid in full and on time.

System

oh okay good, so I guess they will scrutinise it but if I can show an ability to manage my money over the next year or so, (plus save). I should come out of this alright.

Claree__x

RedEye2008 wrote: »

oh okay good, so I guess they will scrutinise it but if I can show an ability to manage my money over the next year or so, (plus save). I should come out of this alright.

Be warned though - defaults stay on your credit file for 6 years and may make it difficult to get a mortgage in that time. Payday loans also look bad to lenders, even if paid on time.

System

no defaults but tons of payday loans
Time to start from scratch.