Installment loan vers credit card?

[Anonymous]

I have about 15 grand in credit card debt including 6 grand on my Discover card. My experian score is 718. My utilization is high on 2 cards because 2 banks lowered my limit. Discover send me an application to consolidate with an installment loan which would lower my payments by about 200 bucks a month. If I take the installment loan, would it hurt my score? or make it better because my utilization would be zero and all credit cards would be paid and a new installment loan added to my credit report? Please help me with an answer before I make a move. Thanks so much.

[chasmith]

At least in theory adding an installment loan (if you have none) to your "credit mix" will help - and certainly not hurt as long as your revolving lines aren't cut and your utilization really drops.

[Anonymous]

Thanks for the advise. I only have a car loan which is considered an installment loan? Hopefully my other cards won't drop my credit line like chase and TD did. They suck.

[Creditaddict]

If you paid off all your credit cards with an installment loan your score would go up for sure.  I didn't know Discover was still offering those consolidation loans, I would love one!

[Anonymous]

Thanks for the answer. I thought it would but wasn't sure. I have to say I like discover.They offer a personal loan to do whatever you want with it. They raise my limits very often not like Chase and TD which lowered mine for no reason. My score was as high as 776 but its only 718 now and I want to get it up high for a possible mortgage.

[Creditaddict]

I just checked, you can not just apply for a loan through Discover, you have to be selected by them.  I know my mom was offered one like 2 or 3 years ago when credit was flowing pretty free, but not anymore.

Same with Citi, they use to offer one when you called in on your credit card, I should have taken it when I had the chance, I think they discontinued the product

[haulingthescoreup]

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@Anonymous wrote:

I have about 15 grand in credit card debt including 6 grand on my Discover card. My experian score is 718. My utilization is high on 2 cards because 2 banks lowered my limit. Discover send me an application to consolidate with an installment loan which would lower my payments by about 200 bucks a month. If I take the installment loan, would it hurt my score? or make it better because my utilization would be zero and all credit cards would be paid and a new installment loan added to my credit report? Please help me with an answer before I make a move. Thanks so much.

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This should help your scores a lot, because of transferring debt from revolving to installment. And it will help your finances, because the lower monthly payment will allow you to get out of debt sooner.

But as you know, of course, the danger is that it's so easy to incur new CC debt while paying off the transferred debt, and then you're worse than you ever were.

If you aren't prone to impulse shopping, you can use two cards a month for such things as gas and groceries, that you would have to buy anyway, and that you have money in the bank to cover. As soon as the charges show up on your online accounts, pay them off immediately, as if they were debit cards. Don't let them stay up a moment longer. Rotate through your cards two at a time so that they won't get canceled for inactivity.

But if, after a lot of soul-searching, you can't be absolutely sure that this won't happen, you should consider putting the physical cards in some hard-to-access place, like a safety deposit box. And if you find that you're fine for several months, and then the temptations of holiday shopping etc cause you to reach for plastic, you might still want to lock them up anyway.

If you've already been CLD'd (credit limit decreased), there's a pretty good chance that those two banks will keep lowering your limit or closing your card outright. When a bank starts chasing the balance this way, there doesn't seem to be anything you can do to make them change their minds. Accept it and move on. Lord knows there's plenty of plastic out there.

[Anonymous]

yes your right, they sent me an invitation to apply. thanks again for the answers

[Anonymous]

great advise! years ago I did that but never again. I use a debit card right now but will start charging on a credit card and pay it off right away. Doesn't the cc companys look at what u buy now?

[haulingthescoreup]

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@Anonymous wrote:

great advise! years ago I did that but never again. I use a debit card right now but will start charging on a credit card and pay it off right away. Doesn't the cc companys look at what u buy now?

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Not that much. AmEx got publicly embarrassed for considering card usage at WalMart, etc to be negative, and they say they don't do it any more. (The funny thing was that they had WalMart listed as a shopping link on their online Mall for AmEx shopping.) Supposedly you still shouldn't use a card at a massage parlor, a shrink, a marriage counselor, or a tire re-tread shop or some such.

But I use any and all of my cards at any of my usual shopping places. At various times this has included grocery stores, gas stations, wine shops, the Chick-Fil-A drive-through, the doctor, the vet, the dentist, you name it. Never had a problem.