Advice on what debts to pay first to help improve Credit Rating

Scifi

Hi there,

Forum newbie, so please be gentle!

OK, so we're after some advice about how to help improve our situation. We currently have a fair bit of debt to pay (due to recent wedding etc) and we'd like some advice on what we should pay first and how we should go about this.

We would normally just rattle through and pay the debts off, however our fixed rate mortgage ends in April 2014 and goes to standard rate (I'll detail this below). So, we'd like some advice on how to pay our debts off in a way which will help us get a better (or not hurt our chances) of getting a good deal when this is up.

We currently pay £760 a month mortgage, and the rate is 7% (i think). When our fixed rate mortgage ends, it will drop to the variable rate which is currently about 4%.

We don't plan on using the credit cards much (if it all) going forward. We aren't struggling to pay our debt off, but we are currently covering all our minimum payments are paying an extra £500 month off the debts.

We also have a car on finance that we owe around £9k on, but we are happy paying that off as normal.

So really, we just would like some help or advice on what is the best way to pay this off to help with our credit scores.

A couple of months of ago my wife got declined for a 0% credit card for a balance transfer. We assume that is because of her level of debt, as we have never missed a payment.

I'll list below details of our current CC debts.


Unsecured Debts
Description....................Debt......Monthly...APR
Barclays cc ..................5581......125.......0
Halifax cc ....................7902......115.......17.95
Halifax cc ....................3779......66.76.....17.95
Virgin cc .....................4210......113.......0
Virgin cc .....................3686......85........0
Santander cc ..................1599......43.24.....17.95
Total unsecured debts..........26757.....548.......-

We currently have two offers for 0% balance transfers on our current cards.

We would basically like some advice on if it would be better to transfer some of our balances onto these deals, leaving some of these cards with a 0 balance (then maybe closing them).
Or paying a bit off each card every month. As we read on some websites its better for your credit score to hold around 30% of the available cash on a few cards rather than maxing out a couple.
Also how long does it take to clear from your credit score if we maxed out 2 cards now making use of these balance transfer offers ?

So any advice would be great!

Thanks

Scifi

Hi

Is anyone able to help me out here?

thanks

Issuma

Hi Scifi, didn't want to read and run, you will tend to find on this site that most people don't worry too much about their credit rating as it's already trashed

Most people would advise that you try and get rid of the debts with the highest interest rates first, have you tried the snowball calculator, this is designed to show you the quickest and cheapest way of paying off your debts.

Good luck on your journey !!

[Deleted User]

I would say transfer as much as you can to the cards with 0%, and try and pay more than the minimum each month on interest charging cards, otherwise it will take many years to pay off(someone told me a £3000 cc debt takes 40 years to pay off if just the minimum is paid). Also, don't give too much weight to credit score; lenders have their own unique interpretation of someone's score.

nicp60

Hi Scifi,
As long as you pay at least the minimum payments on all your credit cards, it won't matter at all which order you pay them off in. It will make absolutely no difference at all to your credit rating.
Some tips that might help, however:

- As "Deleted User" said, transfer as much as possible to 0% cards to help you clear it quicker
- Run everything through the snowball calculator: http://www.stoozing.com/calculator/snowball-calculator.php - include your car finance in this, as you might be surprised at the difference it makes! (Oh, and where it says 'amount available for debt repayments, make sure you include what you already pay in minimum payments in there)
- Do check your credit report before shopping around for a mortgage, just in case there's something dodgy on there
- Make sure you clear the 0% balances before the deals expire - use Martin's Tart Alert service to remind you

Wow 7% - imagine how much you'll be able to throw at your debts when you get a better deal!!!