Which debt more beneficial to pay off first to improve credit score quicker?

workinghard1

Looking for advice on which debt to pay off first (credit card or Littlewoods shopping account) in order to improve my credit score quicker. I have £2900 outstanding on Littlewoods account. I have £8500 outstanding on a BarclayCard. I have been working very hard to try and get in a better situation with debts. Right now I have a spare £3000 to pay to one or the other. If I pay off Littlewoods I will be saving £300 per month making life more affordable now generally OR I could pay £3000 to my BarclayCard bringing balance down, but will still have Littlewoods and BarclayCard to pay each month. I am keen to pay the money I have to the option that will help improve my credit score the most/quickest, as soon it is time to hand back my contract car and start again with another car finance deal (reliable car essential for work purposes, I cover long distances). Do you know if credit scoring agencies regard Littlewoods shopping account debt equal to credit card debt in terms of use of rolling credit? Or does use of a shopping account have less impact than use of a credit card?

Willing2Learn

Hi workinghard1 and welcome to the forum

If it were me, I would pay off the debt with highest APR first, which should be Littlewoods I think. This way would save you the most money and is the most MSE too.

Edit: As for your credit score. You should forget about your score and focus on building a positive history of credit account management. That way, lenders can score you against their criteria and policies using the (hopefully positive) data held in your credit file.

workinghard1

Thanks. My credit payment history is perfect (no missed or late payments), however my score is lower due to utilising a large percentage of my available credit. With this in mind, I want to pay the spare £3000 I have to improve this, however wasn't sure if a Littlewoods shopping account impacts the measurement of "using a large percentage of my available credit". I know credit card balances definitely impact this, however do shopping accounts impact in the same way or not I wonder?

[Deleted User]

Pay off the one which is financially most beneficial - ie the one with the highest APR.

Lenders will be looking at your overall indebtedness, and you'll reduce it fastest by focusing on paying off the most expensive debt.

[Deleted User]

workinghard1 wrote: »

Thanks. My credit payment history is perfect (no missed or late payments), however my score is lower due to utilising a large percentage of my available credit. With this in mind, I want to pay the spare £3000 I have to improve this, however wasn't sure if a Littlewoods shopping account impacts the measurement of "using a large percentage of my available credit". I know credit card balances definitely impact this, however do shopping accounts impact in the same way or not I wonder?

Ignore any reference the CRA give you at improving your "score" - it's not real and lenders don't see it.

Concentrate more on clearing the debt down, which is a real number, rather than the made up ones

workinghard1

Thanks all. I suppose in my head I would like to clear the Littlewoods account as it would be gone completely, it is a hefty £300 per month, I would feel free of it, then I would have only one credit card balance remaining. However, if Littlewoods, being a shopping account, is not a debt that a lender would 'see' when making a decision as to whether to lend to me for replacement car then I would rather pay it towards my BarclayCard credit card balance if it makes things look more favourable to the lender.

Willing2Learn

Littlewoods (ShopDirect) credit account will be reported to at least one of the CRA's. Have you looked at your any of your credit files recently?

workinghard1

Willing2Learn wrote: »

Littlewoods (ShopDirect) credit account will be reported to at least one of the CRA's. Have you looked at your any of your credit files recently?

Yes, last time I looked it was showing on Equifax, and it used to be on Experian but funnily I re-joined Experian again recently and the format looks different. It looks less detailed. Experian no longer seems to show Littlewoods to me, only credit cards. This is kind of what prompted me to think that perhaps having a balance on a credit card is less favourable than having a balance on a Littlewoods account.

Willing2Learn

I would still pay off the Littlewoods first, as the interest is higher and it will save you the most money. It looks good on your credit history to have evidence of successful credit account management. And the ShopDirect account being paid is a positive thing to have showing in your history.

PRAISETHESUN

Focus on the highest interest rate debt first - this will save you the most money in the long run from excess interest charges. Make the minimum required payments to everything, and then throw everything else you can afford to spare at the highest rate one.

You may also want to pay a visit to the DFW board

Craig1981

APR on littlewoods is 44.9% (scary it doesnt mention this in their T&Cs, only when viewing products ?!?!?)
Barclaycard ranges from 6.9 to 34.9 standard, what is yours on?

I assume barclaycard is lower, but, do you have any buy no pay later items still on littlewoods account that are interest free? if so, would not pay those off - pay off whatever is causing interest on them, then whack the rest on the credit card...