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New Member
2manyquestions
Posts: 6
Registered: ‎04-04-2008
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Should I take out a personal loan? If so, from where?

[ Edited ]
Here's my situation... I am self-employed and don't have enough capital at the moment to get where I want to be. However, I am very confident that given a 6 month window with the correct assets, I'd be able to accomplish my financial goals.

Current savings/checking: $800
Savings/checking on May 1st: $5000
CC #1: Limit of $2000, balance of $1900 - VISA
CC #2: Limit of $2000, balance of $1900 - Mastercard
CC #3: Limit of $2000, balance of $700 - Best Buy
CC #4: Limit of $600, balance of $550 - Macy's
Total debt: $5050
Total monthly living expenses: $1500
Work capital needed: Several thousand, I haven't pin pointed a $ amount yet - say $5000 to be safe

It wasn't but 6 months ago that I had $9,000 saved up and no debt but I decided to open my own business due to the lifestyle I want to live. Well, I got lazy and now I'm in some trouble. I checked my score on FreeCreditScore.com and I still have a 700 according to 1 report. I have NEVER had a late payment on anything and prior to 6 months ago, my balances were always in great shape.

My goals are as follows:
- Gain consistent income through the marketing plan I have created using the funds from a personal loan.
- Pay off all debt to 1-9% of the balance (I hate not knowing if I can use a card nowadays because of the worry it might overdraw.)
- Live comfortably on my $1500 monthly living expenses for the next 6 months before I can get the business booming. I need a buffer of a few months because I can't expect a return RIGHT away.
- Buy a home in early 2009!

My questions:
- How much money should I look for in a loan? - What kind of payment could I expect to have monthly?
- Will this help my credit score?
- Where should I attempt to get a loan from? I understand due to lack of consistent income, I would not qualify for DTI reasons on a high personal loan. I also heard (correct me if I'm wrong) that they look at your high credit on your cards for eligible personal loan amounts.

HOWEVER, I believe I can get my father to co-sign for me. He makes $160,000 a year and the DTI won't be an issue at that point. He also has 700+ credit.

I'm only 22 years old and I'm trying to get my life started here. Please help me with any and all advice. Thank you in advance!! I'll be checking in here very frequently because I need to make a move soon!

Message Edited by 2manyquestions on 04-04-2008 03:02 PM
New Member
2manyquestions
Posts: 6
Registered: ‎04-04-2008
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Re: Should I take out a personal loan? If so, from where?

As of right now, I don't have any more than maybe $2000 coming in from one client lined up past May 1st so I need to do something.
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
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Re: Should I take out a personal loan? If so, from where?

[ Edited ]

2manyquestions wrote: CC #1: Limit of $2000, balance of $1900 - VISA CC #2: Limit of $2000, balance of $1900 - Mastercard CC #3: Limit of $2000, balance of $700 - Best Buy CC #4: Limit of $600, balance of $550 - Macy's Total debt: $5050

Your Experian Score is not a real score. :smileysad: With credit being maxed out your score will be very low. Not likely to be approved for anything. But If you pay off all these cards in full wait for them to report to your credit reports, you will have a much better score probably in the low 700s. This with income will get you approved. If you have a cosigner you will get approved. The thing is cosigner or not your rates will be determined on your credit score. You don't even want to look at your real fico score with this maxed out debt. It's bad. So pay it all off, and then you might be good for a $5000 loan. Most personal loans for new risk venture will go up to $10k for 5 or 6 years.

Don't waste an inquiry now. Wait until your debt is completely paid in full reporting 0. You can try the link from my signature for Ploan. I saw a venture loan listed for new business. Citibank also has good personal loans. Just not CitiFinancial unless you are desperate, Citi Financial probably will approve but their loans lower credit scores. Citibank is completely different but harder to get. Always ask if the loan is a consumer finance loan, their bad for credit.

And good luck with your business!

Message Edited by ilovepizza on 04-04-2008 03:34 PM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
ByrdMan
Posts: 7,970
Registered: ‎12-19-2007
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Re: Should I take out a personal loan? If so, from where?

2many, the only thing that I would disagree with Pizza about is that you DO want to check your scores. It's good to see where you are and compare it a few months down the road, so that you know what to do and what not to do. Even if you are in the 500's now, so what. Once you get three of those accounts paid to $0 and allow one to report 1-9% uti, your scores are going to rebound.

Through the month of April, myfico.com is running a special for 25% off. So, use the code and purchase your scores to find out where you stand. Unfortunately, you bought a FAKO.

BTW, welcome to the forum.
___________________________________________________________________
Do what is true in spite of the consequences--your future is only as true as you are.
New Member
2manyquestions
Posts: 6
Registered: ‎04-04-2008
0

Re: Should I take out a personal loan? If so, from where?

Do you guys really think my score is in the 500's? I've never been late on anything... Will my poor credit affect my personal loan if my father co-signs?
New Member
2manyquestions
Posts: 6
Registered: ‎04-04-2008
0

Re: Should I take out a personal loan? If so, from where?

Also, can someone explain how that other score was fake?
Moderator Emeritus
ByrdMan
Posts: 7,970
Registered: ‎12-19-2007
0

Re: Should I take out a personal loan? If so, from where?

You can only get real FICO scores at myfico.com and transunioncs.com (TU ONLY). Scores from anywhere else are FAKOs (except from a lender of course).

Your scores are likely in the 500s.

Your uti is killing you.
___________________________________________________________________
Do what is true in spite of the consequences--your future is only as true as you are.
New Member
2manyquestions
Posts: 6
Registered: ‎04-04-2008
0

Re: Should I take out a personal loan? If so, from where?

Well that really sucks. I probably need to take out this loan more than I thought. This would be considered an installment loan, right? How would it affect my scores if I took this out and paid off everything else? Also, do you guys have any idea what kinda payment I would have monthly on a $15,000-$20,000 loan if my dad co-signs?
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
0

Re: Should I take out a personal loan? If so, from where?

Figure about -12 (very rough est) for ever 10% of credit card debt to total credit combined limits. Example. Ten CCs with a CL of $1k each is $10,000 total credit. Use 10% of that credit and your loose -12 points roughly. As soon as you pay it back you get the points back, but not until your credit reports updates. There's more... Max out a car (90% of more debt per account) and you loose more points, Have too many debts even if it is one dollar left, you loose more points. You are loosing so many points for this credit card debt. But on the good side, once you pay it you get all those points right back. This point loss is different than being late. If you are late, it stays for 7 years. Being in debt stays only until paid. You very well could be in the 500's with this debt.

So why do places sell FAKE scores for us and give lenders more realistic scores? I think it's because they don't want people to be discouraged and walk away. They want people to try and improve their scores so they will buy more fake scores. FICO gives it to you straight. You get the same score your lender gets.

Cosigner or not, I would not try to get a loan because it will leave an inquiry on your credit report just to find out you are denied. You have very very good credit. Just use your savings to pay off your credit card debt and then you will be able to apply and get a pretty good rate.

I think you can get up to $10k on your own, maybe. Definitely $20k with a co-signer with good credit who owns a home. If you are late, it will hurt the co-signers credit. Might be better working out a deal with your dad on paper. Maybe he can borrow the money and reloan it to you on the side. Work out in interest payment and term. Do a private loan...
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
ByrdMan
Posts: 7,970
Registered: ‎12-19-2007
0

Re: Should I take out a personal loan? If so, from where?



ilovepizza wrote:
Figure about -12 (very rough est) for ever 10% of credit card debt to total credit combined limits. Example. Ten CCs with a CL of $1k each is $10,000 total credit. Use 10% of that credit and your loose -12 points roughly. As soon as you pay it back you get the points back, but not until your credit reports updates. There's more... Max out a car (90% of more debt per account) and you loose more points, Have too many debts even if it is one dollar left, you loose more points. You are loosing so many points for this credit card debt. But on the good side, once you pay it you get all those points right back. This point loss is different than being late. If you are late, it stays for 7 years. Being in debt stays only until paid. You very well could be in the 500's with this debt.

So why do places sell FAKE scores for us and give lenders more realistic scores? I think it's because they don't want people to be discouraged and walk away. They want people to try and improve their scores so they will buy more fake scores. FICO gives it to you straight. You get the same score your lender gets.

Cosigner or not, I would not try to get a loan because it will leave an inquiry on your credit report just to find out you are denied. You have very very good credit. Just use your savings to pay off your credit card debt and then you will be able to apply and get a pretty good rate.

I think you can get up to $10k on your own, maybe. Definitely $20k with a co-signer with good credit who owns a home. If you are late, it will hurt the co-signers credit. Might be better working out a deal with your dad on paper. Maybe he can borrow the money and reloan it to you on the side. Work out in interest payment and term. Do a private loan...

Under 50% uti is the magic number where you start gaining points.  So 10% uti, they will gain points back, as much as 10-15 (depending on bucket) per 10% uti.
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Do what is true in spite of the consequences--your future is only as true as you are.

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