Pay off credit card, loan or both to improve credit rating.

thehistorygirl

I have had a bad credit history but managed to get everything under control and although I have one default left on my credit file which is due to drop off very soon, I’m in control of my finances now. Ive recently had a large critical illness payout and am in a position to pay all remaining debts off. I have a Capital One credit card with £900 owing and a small loan of £1000 to pay, I really want to improve my credit score and have a couple of options to help this happen. I have been pre-approved for a Lloyds 0% balance transfer credit card and my plan is to transfer the Capital One balance to that and pay it off monthly to build up my score. I would then pay the loan off in full. The alternative is to do the reverse. Pay off the Capital One card in full and continue to pay the loan monthly, although this obviously has interest added. Or I could pay both off and be done with it. My main aim is to improve my credit score so not sure which would be best to do. 

[Deleted User]

Paying off debts lowers your credit score. But lenders do not see or use it, so forget about improvng the score.

Pay off the highest rate debt first. Clearing the 0%, even if not costing you anything, is also a good idea if you want improve how lenders view you 

Thrugelmir

If you wish to improve credit file. Clear the debts owed. More importantly take the opportunity to break the credit habit. 

Jamesyb123

You could offer experian money to give you a higher score? They may accept it as the score is not related to you as an individual it’s a made up piece of banter, on a serious Note if you have money to pay off your debts just clear them all there’s no advantage to having debt even if it’s 0% just clear what you owe and live debt free