18, Aug, 2022
Should I Pay Off my Store Card to Improve my Credit Rating?

Should I Pay Off my Store Card to Improve my Credit Rating?

If you have concerns about your credit rating then you may be looking for solutions to improve it. It could be that you have a store card that you owe money on and think that if you pay this off then it could help you. It is certainly worth considering things that you could do to help and this could possibly be a solution. However, it is worth checking to make sure that this is the best solution as there could be others that could help you as much or even more.

Consider all debts
It is worth looking at all of the debts that you have rather just being concerned about one. Some debts will be more expensive than others and it could be better to try to pay some of those off first, if you do want to repay some. However, it is really important to make sure that you are keeping on top off all of the payments you have to first. Make sure that you are making all the required payments on your debts as well as keeping on top of your bills. Then you can start to think about repaying things. It will be no good to you or your credit record if you pay off one debt but miss repayments on others as a result. So, make sure that you are budgeting well so that you can cover those costs.

Choose the best to repay
Trying to choose which loan is the best to repay first can be tricky. There is not really any particular type of loan that will probably affect your credit record more than another so you are probably better off using other criteria to judge. There are two main methods that people use. Some will prefer to repay the most expensive debt first. By doing this you will be able to repay the debt more quickly. However, some people prefer to get rid of the smallest debt first so they can see the debt disappearing. This can make you feel more motivated because you can see the amount of loans you have disappearing. If you feel like you need something to push you to be motivated then this could be the thing that makes the difference for you. So, it is up to you to think about which method might be best or whether you might find another method will work even better. It could be that you have a particular debt that really bothers you for some reason and you would just like to get rid of that one first.

How to Repay
If you are ready to repay a debt it does not mean that you have a plan on how to do it. It can be quite tricky to work it out. Firstly, check with the lender to see whether you can make regular overpayments on the debt and if there is a charge associated with this. Find out how you can make the overpayments or whether you need to repay it in one large lump sum. Once you know then you will be able to work out whether to repay it in bits or put money in a savings account until you have enough to pay it all off at once.

Obviously, you will need a plan on how to get the extra money to repay the debts. You might need to cut down your spending in other areas or find a way to earn more money so that you have more available to pay with. There are lots of things that you could try to help, perhaps selling things you no longer need, comparing all prices and buying the cheapest or taking on more hours at work.  It may not be easy but it will be worth it if you can repay the debts that you are worrying about.

Check other information
If you want to improve your credit rating then there are other things that you can try as well as paying off your debt. It is therefore worth starting by looking at your credit report to see what is on there. It is important to make sure that the information is all correct as otherwise you could find that you will be being penalised for something unnecessarily. Being registered on the electoral roll is also something very simple that you can do to improve your credit record. So, although repaying your store card could have a positive impact on your credit rating, it is worth checking it first to see what else you might need to improve. It might be that there are other loans that it would be better to repay first, that would have a bigger impact. Also making sure that your credit rating is correct and getting any incorrect information changed could have a positive impact too.

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