My plan is when I get a fico of 620 is to take out a personal loan or debt consolidation loan with my CU to pay off my last debt that is about 3k..is this a good idea ?
Starting Score: FAKO EQ 497 EX 516 TU 517 (4.28.12)
@pizzadude wrote:
@Isaiah2990 wrote:My plan is when I get a fico of 620 is to take out a personal loan or debt consolidation loan with my CU to pay off my last debt that is about 3k..is this a good idea ?
It depends on several factors ~ what is the interest rate you are currently being charged on the $3K account, and what interest rate would you be able to get on the loan ? Is it in good standing, and type of account is it ? Credit card, or a collection ?
It will be on a collection that hasn't been reported to bureaus yet..no interest at all.
@RobertEG wrote:REmember that you really arent paying off debt, you are shifting the deck chairs.
Financially, it could be a boon.
FICO wise, you will take a hit for a new inquiry, and reduce your avg age of accts. What is your current AAoA, and what would be the effect of the new account?
Do you currently have any installment accounts, or would adding one improve your mix of credit?
What are the chances of approval?
For some reason my EQ AAoA is 1 year 8 months .. my TU is 5 years and 6 months..The account will be used to pay off a collection that hasn't been reported..it's about $2200..my dad was my guarantor and I would hate for it to get on his credit report and it was my fault in the first place..I have 2 installment accounts my car payment ($268 a month) and a secured loan ($228...$57 a month)...My chances right now are 0 out of 0..my CU told me that I won't get approved until I have a 620..I also been thinking about getting a secured cc.
@pizzadude wrote:
If you can negotiate decent terms on the personal loan, and get the CA to agree not to report, then I'd say go for it. Interest rates on these loans can be high, do you have any ballpark idea what rates your CU will offer ?
No I really don't, I doubt it will be anything outrageous.
The other problem may be that the collection could report while you are waiting for your score to get to 620. Have you had any contact with the collection agency to see if you could work out terms with them? Perhaps you could get a WRITTEN agreement that as long as X minimum monthly payment is made then they will not report a collection on your (or your dad's) reports.
If this is a very old collection that is not reporting and you simply want to pay it off so it doesn't haunt you later then you may want to let sleeping dogs lie. And also since your dad is apparently a co-signer or guarantor have you made him aware of the negative status of the account? He may want to do something on his own to avoid a negative mark on his credit and work it out with you later.
@HoldingOntoHope wrote:The other problem may be that the collection could report while you are waiting for your score to get to 620. Have you had any contact with the collection agency to see if you could work out terms with them? Perhaps you could get a WRITTEN agreement that as long as X minimum monthly payment is made then they will not report a collection on your (or your dad's) reports.
If this is a very old collection that is not reporting and you simply want to pay it off so it doesn't haunt you later then you may want to let sleeping dogs lie. And also since your dad is apparently a co-signer or guarantor have you made him aware of the negative status of the account? He may want to do something on his own to avoid a negative mark on his credit and work it out with you later.
I sent her an email Saturday and got an autoreply that she was out of the office and won't be back til the 10th..but I plan on speaking with her about payment arrangments..if I can setup an arrangement I most likely won't take out a personal loan to pay off the debt..My dad is also aware of the debt. I don't expect him to pay anything since it is my financial responsibility..but my dad has been resistant about being my guarantor since that incident, and I don't blame him not not wanting to.