Best way to repay debt to improve credit rating

Amh11

Hi Guys,
Seeking a bit of advice as you lot have all the smarts.:)
My credit rating is less than fantastic due to CCJ because of a stupid oversight with a parking fine.
have a credit card debt of 6k @ 20% APR. I recently took out a loan of 7k for a car at 17.6 % I only needed 5k but 7 gave me a better interest rate. There is no penalty on early repayments for the loan. The repayments will be tight for me as the loan is for a 3 year period.
My question is would I be better off giving the 2k back to the loan company and paying it off earlier or giving it to the credit card company to reduce my debt?
(I have about 1.5k set aside for emergencies).
As always your advice is much appreciated.

Willing2Learn

Hi,

If it were me, I would pay the £2,000 toward the credit card debt, as it has the higher interest rate.

Actually, thinking again, I would probably apply for a balance transfer card to pay off the card with, and then put the £2,000 toward an overpayment on the loan.

Edit: And forget about your credit rating. Your score is unimportant as lenders neither see it or use it. They go on your credit history. Once the CCJ ages and drops off your file, your history will look better. Just make sure you pay your credit card and loan payments on time.

D_M_E

I also would put the £2k on the card and every spare penny going forward to the card as well.

When the card gets down to about £500 would consider using a bit of savings to finally clear it.

Once the card has been cleared then save everything possible and, when there's enough, clear the loan.

EDIT - if overpayments are allowed on the loan then consider adding everything spare to the loan payment instead of saving, should save some interest.

Amh11

Thanks for taking the time to respond Willing,
TBH I didn't think I would get a good 0% with my credit history, my ccj was 18 months ago & those balance transfer fees comfuse me. Plus i already have 3 cards (although i am only using one at the moment).

Amh11

Thanks DME,
The credit card seems to be the popular choice. I am a bit wary of the card as it is so flexible and i am very scared of slipping.

D_M_E

If you are wary or worried about using the card then chop it up - that should stop you using it.

Nebulous2

Do none of your other cards have transfer offers? Not necessarily 0%, even 5 or 6% for life of balance would be better than 20%

Herzlos

How long ago was the parking fine? From a private company? You can apply for a set aside to try and get it removed.

foxy-stoat

Pay £2000 to your card then as soon as the money is showing reduce the limit by £2000. If they increase your limit in the future reduce it again. You want all credit card debt on 0% or low interest - no spending on it.

Amh11

Hi Herzlos
It was about 18 months ago I only realised about 6 months ago. The fine was due to my now Ex partner who used the vehicle at the time. Rather than declare i was not the driver I gave him the final notice and told him to pay it. I heard nothing further and assumed he had. My mistake.