Will paying off revolving debt with a personal loan help out my credit score?

[Anonymous]

I am a newbie here to this forum, so I hope someone can help me out. I currently have about $4600 in revolving CC debt. I am recently engaged, and want to get my credit score up within the next 8 to 9 months.  Currently my mid score is about 645. But my question is, if I get a personal loan to pay off the revloving, will this bring my score up faster? I had a BK that was filed in 07/01, so I don't think that is affecting it too much anymore. I also had a recent collcection for $93 about a year ago, but was paid off about 9 months ago. Any suggestions on how or where to begin?

Thanking you in advance!

[Anonymous]

I dont think so, because in essence what is being done is you are closing one line of credit only to open another in it's place.  So it would be my quess that it would more than likely cause your scores to drop.

[southernficoaddict]

What other debt do you have reporting on your CR?  Do you have any installment loans already?  From what I understand FICO likes to see a good mix of types of credit, so an installment loan may help you increase your score if you don't already have any.  PLEASE somebody correct me if I am wrong.  I am much better at asking questions than answering them.

[Anonymous]

I do have one installment loan with a balance of about $2700. I was not sure if it would help or not. You know I always hear not to have too much debt on my revolving credit lines.

[southernficoaddict]

What is your util%? 

[Anonymous]

It should be around 30%, but no higher that 35%

[southernficoaddict]

If I were you, I would just pay down my util%, without opening any new accounts.  If you pay the util% down, you should see a score increase anyway.  If they were maxed out, I would probably say borrow the money, but it doesn't sound like you are in too bad of shape with it.

[fused]

Paying down revolving debt is the fastest way to imporve your FICO scores. In FICO scoring, installment debt and it's utilization calculations carry far less weight than revolving debt and it's utilization calculations. Installment loans are a great way to pay down revolving debt; however, this might not be necessary in your situation. How much money do you have on hand to pay this 4,600 dollars in CC debt? How much might you have on hand on a monthly basis to pay down this CC debt?

As for your scores, this 1-year-old collection is probably having a big affect on your scores. What type of account was this before it went into collections, CC, loan, medical, etc.?

[Anonymous]

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southernficoaddict wrote:

If I were you, I would just pay down my util%, without opening any new accounts.  If you pay the util% down, you should see a score increase anyway.  If they were maxed out, I would probably say borrow the money, but it doesn't sound like you are in too bad of shape with it.

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I was thinking the same think because otherwise I think the new loan will tank her scores

[southernficoaddict]

Borrowing and paying off the CC's only leaves the door open to charge more on the CC's if something comes up (and something always comes up, lol) and then you will be back and high util% AND an installment loan.

Have you tried to do anything with the collection?  If that is your only one, having it removed would give you a boost also.  I would be DVing & GWing those folks like crazy (especially since it's paid) until the sight of my handwriting on an envelope made them turn green!

Message Edited by southernficoaddict on 07-28-2008 12:13 PM