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New Visitor
Posts: 1
Registered: ‎06-01-2008
0

lien on car and how that might affect my FICO score

I'm considering getting a credit card debt consolidation loan from my credit union. Because of my high revolving credit they will only lend me the money if I put up one of my cars as collateral. Does anyone know if having a lien on my car will reduce my FICO score? Is this generally a good idea to do. They loan would be at around 8% vs. 25% I'm currently paying on this particular credit card I need to pay off. Transferring the balance to another card is not an option at this time as they are all maxed out. Thanks
Valued Contributor
Posts: 1,185
Registered: ‎03-04-2008
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Re: lien on car and how that might affect my FICO score

This is a decent deal. Just don't turn around and run the CC's up again after you make it. You must reduce your debt. Don't worry about the lien - it is not reported to CRA's and every car financed out there has a lienholder.
Moderator Emeritus
Posts: 7,970
Registered: ‎12-19-2007
0

Re: lien on car and how that might affect my FICO score

The lien probably will be reported, but that has no effect on FICO scoring. I agree that this is a pretty good deal, but as jmbfl says, don't run up that debt again, while the installment loan is in effect. I think that the minor hit you will take for the new account, will be offset and then some by the increase you will see from your uti going down. Just be sure that the bank/CU is not trying to be over-officious in their actions (ie. telling you that you must close your cards in order to get the loan).
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