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Since you are going to deal with a loan shark, which is what you are proposing, I will share with you what a scuba diving instructor advised the class to do:
"It's OK, to grab the shark by its tail... PROVIDED, you know what to do next..."
Personally, I don't think you have the slightest idea. I would stick with the credit cards.
I would get the loan, get the util down, and see where your scores are. I would bet that your scores will improve dramatically and you can apply for a new card with a 0% BT offer to pay off this loan.
What is your profile now and what is your score?
Are many of your cards currently maxed out?
@slund5499 wrote:How would taking out a perosnal loan to pay off credit cards affect utilization and credit scores?
The loan won't affect revolving utilization. If you use the loan to pay off revolving credit then you'd reduce utilization by whatever amount you reduced your revolving balances. However, you need to ensure that you do not rack up any credit card debt. You'd be better served by just reducing your revolving balances directly without the loan. Score shouldn't be your concern at this point. Reducing your debt should be your priority.
Are you sure this loan even allows you to pay early? I get promotions from One Main Financial, but the ones I get all the interest for the loan is charged up front. You can pay it off early, but the total interest charged is the same if you pay it off in one year or three years. My recommendation is do not take the loan.
OP - Have you considered a CU?
i got a 2K loan from NASA FCU last month at just 15% with my sub-600 EX score to pay off my credit cards (still waiting for CRA's to update my scores )
This could be a much better option than a 35% loan or using a truck as collateral . Just my thoughts.
Thanks forthe info.
As posted earlier, Cu declined loan application.
Wells Fargo delcined loan application and now trying to get a collateral loan.
Thin credit, low AAofA and a fico of 621 equals denied, denied, denied, denied by everyone for unsecured loan and credit card.
Income under $100K and over $70K. No mortgage or auto loan. 1 charge off from First Premier.........(killing me everywhere I turn).
6 accounts in good standing, not 1 payment missed since opening in 2010. Utilization is 36%. Debt ratio is 4%.
There is no justice in the world today if your new to credit due to aged account falling off.
If your income is that high you should be able to pay the debt off quick without the loan. I took a loan from springleaf at 35% about a year ago before I got my promotion and am planning to pay it off at the end of the month with my bonus. My recemmendation is only to take it if you are in need of it but that kind of income does not warrant it regardless and it will not improve your credit score more than 15 points imo.
@slund5499 wrote:Thanks forthe info.
As posted earlier, Cu declined loan application.
Wells Fargo delcined loan application and now trying to get a collateral loan.
Thin credit, low AAofA and a fico of 621 equals denied, denied, denied, denied by everyone for unsecured loan and credit card.
Income under $100K and over $70K. No mortgage or auto loan. 1 charge off from First Premier.........(killing me everywhere I turn).
6 accounts in good standing, not 1 payment missed since opening in 2010. Utilization is 36%. Debt ratio is 4%.
There is no justice in the world today if your new to credit due to aged account falling off.
With no mortgage or auto loan, I'm wondering if you're renting. I'm going to make some assumptions here, so forgive me if they're wrong, but you'll be surprised at how much you can save if you cook your own food, rather than eating out, and drinking with friends at home, rather than at a bar. I recommend that you take a deep look at where your money is going, because you should be able to pay off your UTL pretty fast with income in that range, without requiring the loan. From there, its all about aging your accounts for six months to a year to build your history and increase your scores.