Help. Which accounts should I pay first?
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KellyJay
Posts: 3 Newbie
Hi, i was wondering if anyone could help me increase my credit score. Me and my partner are looking at buying a house this year, but due to being young, silly and naive a good few years ago... my credit rating isn't that great. Its poor actually. There are 5 old account and 2 relatively new ones. The old accounts have really small balances, literally one is about £47 and the biggest is £150 all together about £400 (some have defaults but over the passed 3 years, I have kept up with minimum payments) I am aware of the defaults lasting 6 years, they have 2 years left. The newer ones are Very and Argos. They have bigger balances, from £600 to £1000... my question is, I'm getting some money soon, which I'm going to use towards my debts, however I'm wondering am I best clearing the smaller ones off with it (the money I'm getting wont be enough to clear everything) or shall I use it to pay off a chunk of the bigger balances? Which method do you think would help my score more? Sorry for the essay but any help would be great. Thanks Kelly x
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Hi, i was wondering if anyone could help me increase my credit score. Me and my partner are looking at buying a house this year, but due to being young, silly and naive a good few years ago... my credit rating isn't that great. Its poor actually. There are 5 old account and 2 relatively new ones. The old accounts have really small balances, literally one is about £47 and the biggest is £150 all together about £400 (some have defaults but over the passed 3 years, I have kept up with minimum payments) I am aware of the defaults lasting 6 years, they have 2 years left. The newer ones are Very and Argos. They have bigger balances, from £600 to £1000... my question is, I'm getting some money soon, which I'm going to use towards my debts, however I'm wondering am I best clearing the smaller ones off with it (the money I'm getting wont be enough to clear everything) or shall I use it to pay off a chunk of the bigger balances? Which method do you think would help my score more? Sorry for the essay but any help would be great. Thanks Kelly x
First of all your score or rating is only seen by you, lenders see your history.
You should clear the debts with the highest apr.
Maybe you shiuld pop over to the debt free wannabe board and post an soa.0 -
I would clearer the larger debts. This way when the larger debts are cleared it feels like your making headway with the smaller/easier debts.0
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Clear the higher APR debts first - ideally you want to be debt free at least 6 months before you apply for a mortgage1
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The "debt snowball" approach advocates repaying the smallest debt as quickly as possible. Once you're no longer making repayments on those, use the money freed up to put towards the next smallest debt, and so on.0
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Paying the smallest debts will give you a warm fuzzy feeling faster, but it's an illusion. Paying the highest APRs will cost you less in the long run and mean you're out of debt faster overall. You can still snowball when starting with the highest APRs, you'll just have to reassure yourself that you'll get there eventually. The biggest thing you need to do is to learn to spend less, and I don't mean on silly purchases, I mean on everything. Getting out of debt is only half the battle, the other half is to learn to stay out of it. Good luck and do check out the Debt Free Wannabe boards, they are full of people who've done the hard yards and will share all the tips you need.0
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