Credit Score Improvement Help

tinyt1991

Hi there, I've recently been in a bad situation and I'm around 5-6k in debt and my credit score has plummeted . I've come into some money recently and was wondering what the best way to improve my score would be. 
Would it be better for my score if I payed the debts off in full and then got myself a credit score builder card or something along those lines OR set up a payment plan for a large amount each month and stick to the payments? 
It's just because someone told me to set up a payment plan and this gives your credit score a boost as it's showing I've stuck to the agreement. I'm really not sure I thought paying the balances in full would be much more beneficial?

Thanks for you help and hope everyone is well during this time.

hermante

The way you pay this debt off should be focused on what makes sense financially not how to manipulate a number sold by businesses that do not lend money.

If this payment plan has 0% interest then you should take it up and stick the money into an account paying 1% interest (or more if you can find one). If it charges interest then why would you waste money not paying everything off in one go?

D3xt3r5L4b

Your “score” is irrelevant in all of this.
Get the debt cleared down ASAP. 

Stigy

Clear the debt ASAP. I was in a similar situation a few years ago (although it was a bit more than a few grand). Once I'd paid it all off and was in a better place I applied for a credit card with a specialist company (Vanquis/Aqua/Ocean that sort of card). I used the card for fuel and paid it off in full every month. I then got a second one and did the same, rotating them (because the more credit you have available, but the least you use, tends to be better for your credit file). Once my score started improving (as irrelevant as the score is, its a good personal basis to see how you're doing if that makes sense?) I cancelled one card and replaced it with another, better card with a higher limit. I then did the same with the other one. It took a few years but I became credit worthy quite quickly. I also had a phone contract which helped. The only things that WILL NOT help are payday loans, for obvious reasons.

I had a couple of CCJs and the like too, but once they dropped off my file things became easier too. I don't know how bad it is for you, but all you have to bear in mind is that after 6 years a debt 'falls off' your file whether it's paid or not. I was cheeky with a few lenders (I say lenders, I mean agents that lenders had sold debts to) and offered them silly money to clear some debts, knowing that they were agents of the original creditor anyway and were after whatever they could raise from me. I think I probably paid a third in total of what I actually owed. I was mid-divorce and my now ex-wife got away scott free basically, so any savings I could make were ideal.

Is it morally right? Frankly who cares. If you want to get out of debt and turn your life around, do whatever you can(legally of course...). Good luck!

Stigy

Regarding a payment plan, it'll look good if you're not in arrears already, but won't improve your rating if you are. The best thing to do is as I said above and others have inferred. Clear the debt ASAP and after 6-years maximum (it depends how old the debt is as to how long you'll have, but no more than 6 years), you'll notice it a hell of a lot. Remember also, if you've avoided CCJs and debts are nearing their 6 year mark, as long as you make no contact, they drop off your file anyway.

tinyt1991

thank you for your help guys, I'll just clear all my debts straight off and wait it out. again thanks.