Personal loan and effect on utilization

[Goblin]

Great. So did that answer your question?

By the way, I'm not going to advise you against using a loan consolidation company like them, because you know your situation the best and I'm sure you've done your homework.

I'm curious if you have done your research regarding One Main's competitors such as Avant Credit, or Spring Leaf?  Maybe another company has lower rates for you to consider. Also, be sure to conduct a search online for the borrower reviews of these companies. 

[Anonymous]

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@slund5499 wrote:

For the record,

Highest APR on current cards is 22.9%.

Purpose of the loan is to get utilization down and scores up....so I can qualify for CLI and new credit 6 months down the road.

Loan at 35% is high, but can be paid back in 1 year.

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Someone can check my math, but I believe your monthly payment is lower with the 35% loan than the credit cards because the CC is based on you paying back over one year, while the loan is based on you paying back over 3. You will pay MUCH more in interest with the loan than just sticking with the credit cards. If you can pay off the loan in a year, you can probably pay off the credit cards in 8 months. The loan will actually accrue ~$300 more in interest than the cards alone over the first year. 

I'm begging you to reconsider the loan. You'll end up losing a lot of money and not gaining much by way of credit score. I don't know why you need a CLI in 6 months, but if you just pay off cards as soon as you can, you'll be in better shape financially than if you took the loan, which is more likely to result in your being extended a CLI. 

[slund5499]

It was just a thought.

We did a similiar thing 2 years ago with furniture. Bought $2K in furniture, financed at high APR 36% paid the loan off in 11 months.

Thought the situation would be similiar.

[slund5499]

Springleaf wants my truck as collateral for 4 years.

 Advant....still waiting to hear from.

One Main Financial.....unsescured 3 years

[Goblin]

Thanks for getting back, Slund.

Although it's frowned upon here, I have considered the same thing you are.

One of the reasons I decided not go down this path was that I read negative reviews of companies doing a bait and switch tactic, where they approved an amount, but after the borrower went to do the paperwork, the company dropped the offer to about 1/3 of the originally stated.  So obviously be careful with that.

If you do happen to go through with it, do you mind updating here so we can see the results?  or maybe send a PM

[bkelly906]

I would try another CU if you can or recon the CU you already applied with.  I was able to get a 5k personal loan from my local CU with a 601 TU FICO a few months ago and used it to pay off a judgement.  I was originally denied buy I called and reconned and was approved.  I had to take their highest interest rate which is 12.95% but that is a huge difference from 35%.

[Involver]

I'm not one to judge, but why exactly are you looking for higher credit lines from your current creditors when you're already considering taking out a 35% (gulp) loan to pay off what you already owe?

Based on how difficult your approvals have been, even for secured cards, I would spend your effort trying to mitigate the damage that has already occured than putting yourself in a position for more to occur.

Scores don't matter at this point. Pay down what you owe on the revolving accounts. You will be much better off for it.

My .02

[Chris679]

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@Involver wrote:
I'm not one to judge, but why exactly are you looking for higher credit lines from your current creditors when you're already considering taking out a 35% (gulp) loan to pay off what you already owe?

Based on how difficult your approvals have been, even for secured cards, I would spend your effort trying to mitigate the damage that has already occured than putting yourself in a position for more to occur.

Scores don't matter at this point. Pay down what you owe on the revolving accounts. You will be much better off for it.

My .02

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Exactly.  OP the answer to your question is yes this loan will improve your score sognificantly.  What you are missing though is the entire point of having good credit is to save money and allow you to finance large items at low interest rates. The loan is a terrible idea that will just dig you deeper into an already bad position.  Instead, tough it out and pay off these cards and stop financing things unless you have 0% APR,

[credit-hunter]

those hard inquires are going to bring you score down a little more 

[NRB525]

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@Anonymous wrote:

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@slund5499 wrote:

For the record,

Highest APR on current cards is 22.9%.

Purpose of the loan is to get utilization down and scores up....so I can qualify for CLI and new credit 6 months down the road.

Loan at 35% is high, but can be paid back in 1 year.

---

Someone can check my math, but I believe your monthly payment is lower with the 35% loan than the credit cards because the CC is based on you paying back over one year, while the loan is based on you paying back over 3. You will pay MUCH more in interest with the loan than just sticking with the credit cards. If you can pay off the loan in a year, you can probably pay off the credit cards in 8 months. The loan will actually accrue ~$300 more in interest than the cards alone over the first year. 

I'm begging you to reconsider the loan. You'll end up losing a lot of money and not gaining much by way of credit score. I don't know why you need a CLI in 6 months, but if you just pay off cards as soon as you can, you'll be in better shape financially than if you took the loan, which is more likely to result in your being extended a CLI. 

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+1

OP: If you are paying $210 now, you would be best off continuing that. What are your minimum payments total? Per card? Interest rate and balance on each?

You have $2,200 on the cards, don't make it worse by taking an additional $800 in this loan. You are going to be tempted (Look! All this freed up CC capacity to charge!) when what you need to do is disprove your FICO "high risk" score by paying the current amounts back.

You can get a lot of advice and support here, and its anonymous.