What is worse for credit score; always overdrawn or credit card debt

mschieff

Hi all,

I'm currently having a financial make over and want to sort my mountain of debt.

I am always overdrawn on 3 bank accounts.

I have 16k of credit card debt spread across 4 cards. Which i balance transfer to keep 0%.
As i do this i need to maintain good credit score.

So, as i need to maintain a good credit score, which is best to focus on paying off in terms of credit score? credit cards or overdraft (and then close overdraft)?

Thanks
Matt

[Deleted User]

You don't need to maintain a good score - it's not seen or used by anyone, and not a measure of anything important. You need to maintain good credit history, which is entirely different.

This will be achieved by reducing debt. Pay off the most expensive - but bear in mind that an OD can be withdrawn at any time. If you can't repay it, that will appear as an arrangment or default.

mschieff

Thanks.
I would be closing the overdraft facility after paying. Would that improve rating.

I need to maintain a good credit score so i can keep my credit card debt interest free, i need to be able to keep balance transferring, if i have a bad score i won't get the offers to do so at 0%.

[Deleted User]

You don't need to maintain a good score. It is of no use to you.

You need good credit history. Clear your debts, get out of your ODs.

If you really want a good score, do not pay off any of your debt. Ever. Keep everything the same.

You score will drop if you pay off debt, close accounts, or take on new debt or open accounts.

mschieff

Okay great. so basically to keep good credit history i need to focus on getting out of the overdrafts as a priority over the credit cards?

I want to eventually pay off the credit cards debt (16k down to 1k ish), or get them to a manageable small amount which will keep my score good.

Thanks for the advice.

[Deleted User]

mschieff wrote: »

get them to a manageable small amount which will keep my score good.

D'oh!!!!!!

mschieff

I'm asking what debt i need to prioritise paying off. I'm struggling to get 0% free balance transfer offers and i assume thats due to a bad score.

[Deleted User]

No. It's due to your indebtedness, your income, and anything else that appears on your credit files.

[Deleted User]

Again ignore the score.
It’s not a real number lenders see, use or care about.

Focus on clearing the debt down

mwarby

Also worth bearing in mind there are plans (by FCA I believe) to tackle persistent debt, this may be leading banks to tighten up on the lending criteria.