Credit rating question

emanresu_3

Hi all.

Bit of advice needed.

I currently have 4 credit cards. I will pay off and close both store cards next week leaving me with a Capital One card with a 200 limit and a 29.9% APR as well as a HBOS card with a 1000 limit @ 17.9%


HBOS asked me to return the card to them after going OVER my limit by 800, I have now a balance of around £350, having made payments of of around £300 for the last 6 months. I still do not have the card.

My question is:

Should I pay the balance off and then ask for a new card to help me rebuild my credit history (default 5 years ago) or pay it of over the next 6 months which will show a healthy payment history with them?

If i pay it all off they might still think I'm too much of a risk and say no. Then what no balance to pay to show them I can manage the account.

I.E pay 6 payments of 60 odd pound or pay it all now and close the account and hope that having one account with capital one paying the full balance every month helps my rating

The_Boss

First piece of advice - dont close the store cards. Keep them open for a while.I closed several cards and reduced credit limits and havent been accepted for any card or loan since (4 card apps at least, 2 loan applications)I suspect HSBC may close the account when fully paid off, so keep doing it slowly. Keeping the store cards is a valuable way for you to be building more good history after the default, so definitely keep them open and pay off each month.

Bokkens

I would start building your future credit rating and financial awarness right now.Start looking at all of your cards and the amount of interest you pay .
ie. 29%,16.9% etc.
This is money you are paying the credit companies that could be in your pocket .If it is in your pocket then you will find your money will go further and it won't be such a struggle to meet the payments.
Try and pay off as much as you can as soon as you can and when it has all been paid off start putting that money into a savings account with a new bank say A&L and keep saving and don't buy any stuff for six months and then approach the bank for a credit card.It is hard to do but you can't beat the feeling of being in charge of your own money and owing nothing to anyone.
good luck.
if you are stuck post again.

anniecave

Yeah if you keep cards open but they are paid off and you are not using them then it shows on your credit history as a plus point each month, so it's like you paying them off in full each month. So yes keep them open as it will help your credit history.

Aim to pay them all off ASAP - pay the higher rates first but make the minimum payments at least on the lower rates.

Once you've paid one of the credit cards off in full, leave it a month, then you can start using it for general spending each month, making sure you always in future pay it off in full!

Yes and work at being in control of your money so you pay cards off in full each month and really make sure card companies aren't making money out of you! You could get a cashback card for example sometime in the future. That way they pay you for having the card, not you pay them interest!

emanresu_3

Thanks for the advice people.

I've now got a debt free date of the 20th July :j

I'm going to follow the advice of waiting a month then using it for everyday spending and then paying it in full.

I don't like direct debits at all - don't have any, prefer to have standing orders. If I use the card for cash withdrawals I think interest is charged immediately, therefore should I set the S/O to pay a few days before the day I lift the money.

One more thing how much of a positive balance can I have before it becomes an issue.

e.g if i have a nill balance and pay money to the card even if no money is owed?

tom188

dont use the card for cash withdrawals. you will be charged a fee and interest from the moment you take cash out, and this will sit on the card until everything else is cleared.

Mozette

Why would you pay to a card that you have no balance on? I really don't get why you would do that, why not put the money in a savings account, unless you have egg money of course.