Paying off credit cards in full

smudge_don

Hi all,

I've recently been lucky enough to come into some money and want to clear my credit card debt.

This amounts to roughly £5,000 across 4 cards. I am typically at or near the limit for these cards and the monthly repayments are quite high as a result.

I have a fairly poor credit score and was wondering if it's simply best to pay all the cards off in full and then close the accounts, or if it's worth keeping 1 or 2 and using them sensibly to rebuild my credit rating? Would paying them off in full and then closing them also improve my rating?

Advice and suggestions please

Thanks

lisyloo

Lenders want to see sensible management of debt, so I would say your best course of action would be to continue using them sensibly.
The most sensible way to use cards is to pay them off in full each month.

I would keep 2.

Closing them completely may improve your rating in that there would be no on-going bad management of debt, however evidence of good management of debt is much better.

[Deleted User]

Pay in full, then use regularly and clear in full each month. You might want to close 1 or 2.

smudge_don

Thanks guys, I'll keep 2 I think.

1 for regular use with sensible repayments and 1 for emergencies only

The others will be paid off in full and accounts closed

Thanks

Mr_K

Best way is to set up a Direct Debit each month to pay the full amount. You'll never pay a penny interest.

Even better get a cashback card and you'll end up in profit.

King_Of_Fools

For the ones you keep, try to assess which are the better ones offering you more benefits and will look better on your credit file.

Not knowing which 4 cards you have, some may offer better terms (longer time to pay off, lower APR if you ever need to not pay off in full, cheaper use overseas, better customer incentives, etc.). Some may be viewed less favourably on your credit report (e.g. cards specifically for people with poor credit).

Ben8282

The first question is WHY do you want to improve your credit rating? If it is to apply for more credit cards to replace the accounts that you are closing then why bother?
Suggest you keep them all (unless there is one you really don't like or something), use them sensibly and pay in full each month. Your overall total available credit is quite low so I would not really recommend reducing it. I also think 4 credit cards all used for a few purchases each month and all paid in full would look better than 4 closed credit card accounts and 0 available credit.

ged1980

Ben8282 wrote: »

The first question is WHY do you want to improve your credit rating? If it is to apply for more credit cards to replace the accounts that you are closing then why bother?
Suggest you keep them all (unless there is one you really don't like or something), use them sensibly and pay in full each month. Your overall total available credit is quite low so I would not really recommend reducing it. I also think 4 credit cards all used for a few purchases each month and all paid in full would look better than 4 closed credit card accounts and 0 available credit.

OP said in there post they want to improve there credit rating and nowhere did they say to get more credit? Good advice from others keep 2 open will help your rating.

datlex

You have not said what cards you have. Having a couple of cards is good. I do however wonder how you ended up with 4 cards at limit. Did you use the cards as additional funds? You need to be careful not to do this again. Use 1 or 2 cards as a means of payment not a source of extra funds. Select the cards based on what they give you, cashback, rewards etc.

I am guessing if you have a poor credit rating this could have impacts on things like phone contracts etc. Hope things get better for you.

uncreative

ged1980 wrote: »

OP said in there post they want to improve there credit rating and nowhere did they say to get more credit? Good advice from others keep 2 open will help your rating.

Yes but WHY would they want to improve their credit rating? The only reason that is logical to conclude is they are getting in shape to borrow more at some point, or change to a new form of credit to achieve better rates. Both of which are technically applying for new credit.

Why else would you want to improve your credit score?

daveyjp

uncreative wrote: »

Yes but WHY would they want to improve their credit rating? The only reason that is logical to conclude is they are getting in shape to borrow more at some point, or change to a new form of credit to achieve better rates. Both of which are technically applying for new credit.

Why else would you want to improve your credit score?

Because its better to have a good one than a bad one. Credit checks are carried out for far more than credit cards. Insurance, household utilities, mobiles.