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Paying off two old credit agreements
Matt113355
Posts: 1 Newbie
Hi all,<br><br>Just a quick question, I have two old credit agreements from the same payday loan company that I stupidly took out 3 years ago, on my credit file they total just £488. That is my total debt, I want to build up my credit rating over the next 5 years so I can save up for a house.<br><br>I have the money to pay them both off, but I am trying to understand the best option. Because in 3 years they would both come off my credit file completely anyway, They were just two small loans of £100 and the interest added up, both accounts are defaulted as of 3 years ago in 2013.<br><br>My question is, if I find the company and pay the two debts off, how will that effect my credit file? Doe
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Comments
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Satisfied defaults will look marginally better than defaults.0
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But it's such a marginal improvement that you're going to be screwed credit wise until they drop off either way.0
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Hi Matt, welcome to MSE
Once the debts are paid this will start to improve your rating but this will take time. The older information is on your file the less of an impact it should have on your overall rating so hopefully the defaults will be less influential over the next 3 years. If you don't settle the debts, however, then that would be more damaging to your score (than paying them) and it would also leave that debt as outstanding. An outstanding debt means the creditor to consider court action.
If they issued claim forms then the debts would increase through court costs. If you can pay the debts (and court costs off) then that would prevent a CCJ going on your credit file but would cost more money. It seems unnecessary to chance this if you can clear them now.
Laura
@natdebtlineWe work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps0 -
Its not that large an amount that you would want to risk a CCJ for, and for me personally I would want to pay what I owe rather than chance anything by not paying on the basis that in 3 years no one will see them. Settled debts will look better than non settled I would have thought0
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