Airing my dirty laundry, seeking input

[frank0830]

Longtime lurker, new to posting on the forum. What amazing advice everyone gives. Now its my wife and I's turn to get these awesome numbers on our records and achieve financial happiness we have been going after for many years.  

Without getting into details, I have 1000cl on a NFCU rewards card (maxed), and a 350cl Cap1 plat (maxed). My wife has 2 cards, both maxed, total for all of our credit cards is $2200, maxed out.   

In the process of fighting a tax bill with our state, they put a lein on our home. We have about $700 left to pay them and it will be paid off. 

I have been out of the military now for three years and we are finally just settling down. I have a great job as does she. 

This weekend  (with the advice from this forum) we opened a bank account with Wells Fargo. We have tried other banks/credit unions in the area with horrible service and feel based on our first impression that WF will be great for us.

With that, they offered us a $3000 loan which could put our outstanding debt into one payment, sorta like a consolidation. They did not mention a rate nor did we appy on Saturday so this is not a 100% sure thing yet. Would this be an option to get our credit rebounding, if they would approve us? I told her my fico score EQ527 and she said while that isnt good, they have underwriters that will work with us. I think we would get the loan.

[Jutz]

I would ask specifically if she has had a history of getting consolidation loans approved at your scores, and what the APR has been.  Obviously if you could save yourself from the probable 20%+ APR you're paying on your cards, then it would work out.  However it's not even worth the hard inquiry if it's not likely to happen.

Either way I would put together a plan to agressively attack your debt, starting with the highest interest rate.  Try to buy yourself some wiggle room on each card so they aren't quite maxed out, you don't want the APR to bump you over limit.  Make a frugal budget and figure out how long you need to stick to it.  It sounds like the tax lien is probably making life more difficult, but you'll still need to get those cards paid off.

Remember:  It could always be worse.  People come on here regularly with 10-20k and more in CC debt.  You have a fraction of that, and should be able to pay it down quickly.

[frank0830]

Thank you for the reply. 

The lady we worked with on Saturday made it seem like it wouldnt be a problem. I will specifically ask again and take it from there. 

Our debt isnt a lot but seems overwhelming. A more strict budget would sure help! 

[Shogun]

If you can get it and get it at a decent rate, then I would do it.  Then make max payments on it to decrease the interest paid.  Be sure not to run those cards back up though!

[Jutz]

A general question about consolidation loans; are they generally front loaded or simple interest?

[frank0830]

For what its worth, she didnt make it seem like a consolidation loan. -it was more of a personal loan which we could use twords the debt. 

I will call her this evening. 

[StartingOver10]

Remember, the banker/teller/CSR at the bank is paid a bonus if they can sign you up to more accounts - especially a loan, so they ask everyone. She can't tell you whether it would fly or not because the loan still has to be underwritten by Wells (either manually or automatically).

IMO it would be wise for you to not consolidate or add a personal loan or add another loan payment at this time based on the info you posted above. You will get in much better shape if you could pay down your cards to less than 50% before you apply for such a loan. In the process, once your have determined your budget as suggested above, I bet you won't need the loan! Save yourself some heartache and establish your budget right away. Read the rebuilding thread by p- and you will see what to do to go from your current scores to over 700.

BTW, before I came here I had no idea how much utilization actually affected the scores. If you get a much better score, the loan terms would probably be much better than what Wells would offer you now (if they could even do it). This keeps you from getting stuck in a bad Wells loan.

[frank0830]

I am considering all options before I have them run my credit

Do they pull credit when you open a new bank act?

Also, do you have a link to that rebuilding thread?

[madmann26]

Most banks will pull your credit but it's up to the bank as to whether it's a hard or soft pull.

[frank0830]

That is what I thought. I know that the lady went into the branch managers office before they offered it to me...I was not able to speak to her last night and will not get a chance to call until tomorrow.

Another plus that would come out of this, I could pay off the lein and re-fi my house. 5/3 already has approved me for this.