Honestly I had a great time doing my EPQ last year, because I chose something I was genuinely passionate about. Since you're doing three subjects which all have essay components to them and you want to study Psych further it would be a great chance to see if you actually do like your subject and would enjoy studying it at university. Some people find it just clicks with them, and others realise half way through that they actually don't like the subject they were considering studying-and even if you end up not enjoying what you chose, it's still an important lesson in essay deadlines and writing skills! It's so much more independent than anything else given at school and with EPQs unlike the IB's EE you basically have as far as scope as possible to go for with your title. Just a friendly note though that (at least in my school) your title couldn't be about anything related to something you've learnt in one of your subjects! For example, my EPQ title was 'The success of economic policies used to control Hong Kong’s integration back into mainland China before and beyond 1997' (I know, catchy right? XD) and I've applied for Geography. Since we never directly cover economics, I knew this would be safe route to go whilst still being able to apply ideas I had learnt in the Geography course, like industrialisation, inequality and socio-political factors etc. etc.
If you're not sure what you want to write about, a good idea is to maybe go on YouTube and just search psychology related videos. My whole inspiration for my title, for example, came from a VOX video called 'How China is erasing its border with Hong Kong.' It was just a short ten minute video but was well researched, filmed beautifully and essentially ended up forming the base of my whole title. It's not for everyone though-I definitely do see it more positively than some of my friends cause I chose a title I liked and like essay writing anyways!
And yes it does help a lot with UCAS-a lot of universities are even starting to accept it as its own standalone thing ie. 2 A s in A Levels and an A in your EPQ, rather than 3 A s or something. It's great!