topic CC Debt vs. Loan Debt in Understanding FICO® Scoring

CC Debt vs. Loan Debt

brcamacho — Fri, 18 Jan 2013 17:59:53 GMT

If I have a loan with a balance of $xxxx would it be beneficial to transfer that debt to a CC with a zero percent balance transfer, to pay the debt off faster? Even though it would take that card up to about 90% UTI?

But it would show a payed off loan?

Thanks

Re: CC Debt vs. Loan Debt

pizzadude — Fri, 18 Jan 2013 18:55:38 GMT

If you are certain that you can use a check from your CC to pay the loan, and that it will be at 0%, then it might make sense. But you really need to check the fine print of the balance transfer. Sometimes interest is charged retroactively to the start of the transfer after the promotional period.

The loan will show as a paid off and closed after you do this. Your FICO® score will take a hit from the maxed out card but if you can save $ then IMO it's worth it. Run the numbers again to make sure that you'll really save enough money. My 2¢.

Re: CC Debt vs. Loan Debt

Revelate — Sat, 19 Jan 2013 05:07:55 GMT

This sort of arrangement is almost certainly going to be counted as a cash advance, and I don't think there's any BT offer in existance which allows for 0% interest on such things. I could be wrong but it's got to be near wooly mammoth rare.

Look at the terms and conditions of that BT offer once, and then again, and then a third time before doing so.

Generally speaking, it's better to consolidate credit card debit onto an installment loan both for APR and for FICO purposes rather than the other way around. Even a fully paid installment loan provides little benefit FICO wise, and has been reported as a negative at times too.

Re: CC Debt vs. Loan Debt

cleansheet — Sat, 19 Jan 2013 15:01:37 GMT

+1 for checking the facts. This will probably be treated as a cash advance and generally charged interest from the date of transaction. In most cases it is better to reduce CC debt before loan debt.

Re: CC Debt vs. Loan Debt

brcamacho — Mon, 21 Jan 2013 15:51:09 GMT

Thanks guys. I'll just leave it as is.