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Personal loan or no?

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Anonymous
Not applicable

Personal loan or no?

Alright, I have a credit score of 775, about $800 in c/c debt, and I am wanting to to buy a new refrigerator and sofa for about $2500 total. Is it worth it to get a $5000 personal loan @$156/ month for 36 months? Can I use the difference to pay off the loan sooner. I currently have no car payment, and pay close to $100+ in minimum payments on the c/c bills. I also don't have that many accts. on my credit report (5). So, I'm hoping a new line will help my score. Just a little scared to pull the trigger. Any advice guys?
Message 1 of 5
4 REPLIES 4
SouthJamaica
Mega Contributor

Re: Personal loan or no?


@Anonymous wrote:
@Anonymous, I have a credit score of 775, about $800 in c/c debt, and I am wanting to to buy a new refrigerator and sofa for about $2500 total. Is it worth it to get a $5000 personal loan @$156/ month for 36 months? Can I use the difference to pay off the loan sooner. I currently have no car payment, and pay close to $100+ in minimum payments on the c/c bills. I also don't have that many accts. on my credit report (5). So, I'm hoping a new line will help my score. Just a little scared to pull the trigger. Any advice guys?

I wouldn't if I were you.

 

If you really want an installment loan just to pad your credit mix, do it with a small share secured loan. (Join Alliant Credit Union, take out a $500+ savings account, take out a $500 share secured loan secured by the savings account with a 48 or 60 month term, decline or cancel autopay, transfer $455 from the savings account towards the loan balance bringing the balance down to $45. Pay that off slowly over the balance of the term. Once the $45 balance reports the positive effects will be felt. On the downside, you will be getting a new account, which has a slightly negative effect on your scores.)

 

BTW making minimum payments on your credit cards isn't good for your scores or banking relationship; you should pay them down.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 2 of 5
Anonymous
Not applicable

Re: Personal loan or no?

A few questions/points:

 

  1. Where did you get your credit score from?  Website?  Not all "credit scores" are meaningful, some are meaningless.
  2. Not all personal loans show up the same on your credit report.  Some loans offered from retail businesses show up as "consumer financial loan" which can actually hurt some credit scores, while bank loans can help as the utilization of the loan drops over time from timely payments
  3. You SHOULD always have at least one bank installment loan active so getting a $5000 loan and using half of it to pay itself down can be very good for your credit score over the next year as the utilization hopefully drops below 30% (get a $5000 loan, pay down $3500 of it however you can, pay the rest over time).
Message 3 of 5
wa3more
Established Contributor

Re: Personal loan or no?

Not sure there is much to gain for having a credit score above 775. looks like the interest rate on this loan is about 9%. I wouldn't

Message 4 of 5
Anonymous
Not applicable

Re: Personal loan or no?

I think you should concentrate on looking for what is the lowest interest rate and save you the most money.  Looking for a loan to increase your score when your at 775 (If this is a FICO 08 Score) is not really helpful.  Your not going to see any benefit from creditors having an 800 vs a 775.

 

That said with your score, and saving money is the goal. I think you should get a 0% credit card on purchases and balance transfers and use that to move your credit card debt to and pay for your new purchases.  This will get you to a point where you are paying no interest and can put all your money towards principal.  Once you are paid off, you should then look at taking out a SSL just to add to your credit mix. See link below.

 

http://www.doctorofcredit.com/strengthen-credit-installment-loan-using-secured-loan-technique/

 

Message 5 of 5
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