Clearing debt and credit score

oliel

I have quite a bit of debt loans credit cards (some cc are joint some in my name).   The loan has 2 years left but my first place of action is to overpay on that which means i get could get it paid off by next summer a year and a bit early - which would free up about £320 per month.  My next plan was then to start chipping away at credit cards - the ones I have are 0% at the moment.    Is it helpful to my overall credit score to make additional payments on the cards each month even if it's only £5 on each?  My overall plan is to clear the debt and get my credit rating as good as possible so that any further borrowing is at the best rate possible.  Any advice greatly appreciated.

MattMattMattUK

oliel said:

I have quite a bit of debt loans credit cards (some cc are joint some in my name).   The loan has 2 years left but my first place of action is to overpay on that which means i get could get it paid off by next summer a year and a bit early - which would free up about £320 per month.  My next plan was then to start chipping away at credit cards - the ones I have are 0% at the moment.    Is it helpful to my overall credit score to make additional payments on the cards each month even if it's only £5 on each?  My overall plan is to clear the debt and get my credit rating as good as possible so that any further borrowing is at the best rate possible.  Any advice greatly appreciated.

Your credit score/rating is a made up number, entirely pointless and no lender ever sees it. It was created by the CRAs for marketing purposes, ignore it entirely. 

Any future lender will want to see debt responsibly paid off, no defaults, a healthy deposit for a mortgage etc.

What do you envision this future borrowing to be for?

CliveOfIndia

oliel said:

I have quite a bit of debt loans credit cards (some cc are joint some in my name).

There's no such thing as a joint credit card.  You can have an additional cardholder on a credit card account, but it's the account holder who is solely responsible for the debt - and it will be recorded on their credit file, no-one else's.

oliel said:

My next plan was then to start chipping away at credit cards - the ones I have are 0% at the moment.    Is it helpful to my overall credit score to make additional payments on the cards each month even if it's only £5 on each?

There's little to be gained by making overpayments on a 0% debt.  On an ordinary interest-bearing credit card, making only minimum payments each month is viewed as a negative.  But if the card is on a 0% promotional rate, this will be flagged as such on your credit report, so paying only the minimum is expected behaviour.  However, it is really important that you clear the cards in full by the time the promotional rate expires.

And, as correctly pointed out by the previous poster, ignore your score - it's the factual data in your file that's important.

You're generally better to focus on making overpayments to whichever debt has the highest APR, as this will save you the most money - though do check to see if there are any penalties for making overpayments on a loan.

oliel said:

My overall plan is to clear the debt and get my credit rating as good as possible so that any further borrowing is at the best rate possible.

In order to increase your "credit-worthiness", or whatever you want to call it, all you need to do is reduce your current debt to the lowest figure possible - zero, in an ideal world.

Aside from that, using a credit card responsibly can help to build up a favourable credit history.  Responsible use simply means using it for planned, budgeted purchases (food, petrol, whatever) and always repaying in full every month when the statement arrives (well, between the statement arriving and the "payment due" date), without fail.  This will show a lender that you can use credit responsibly, borrow within your means and always repay what you owe.

 

Andyjflet

If it was me I would be looking at paying off my debts so I "didn't" have to get into debt again. What's your end goal here? Credit Score is for people in debt, showing debt companies how good they are at managing that debt.