cancel
Showing results for 
Search instead for 
Did you mean: 

Consolidation Loan-Effect on Score?

Established Member

Consolidation Loan-Effect on Score?

My husband and I are thinking of doing a consolidation loan, but we will have to close out the accounts that are paid off.  Do you think our FICO scores will take a big hit?  We have history dating back to 1997.  We could save so much money by doing this plus we want to buy a new vehicle soon.  But we are not sure how this will effect our reports.
Message 1 of 2
1 REPLY
Highlighted
Moderator Emeritus

Re: Consolidation Loan-Effect on Score?



vaupinya1 wrote:
My husband and I are thinking of doing a consolidation loan, but we will have to close out the accounts that are paid off.  Do you think our FICO scores will take a big hit?  We have history dating back to 1997.  We could save so much money by doing this plus we want to buy a new vehicle soon.  But we are not sure how this will effect our reports.


Welcome.
 
We need a lot more info to give you any advice.  What kind of debts are they (CC, auto, etc.)?  What is the balance of each one?  What is the CL of each tradeline?  What is the interest rate (for finance charges) on each?
 
What is the interest rate on the consolidation loan?  Is it lower than the interest rate on each of the debts you want to consolidate?  Are you really getting a consolidation loan, or are you entering a DMP (debt management plan) with a credit counseling agency?  A DMP will count against your score, plus you have to pay them fees, plus you have to be extra vigilant to make sure that the money you pay to them is actually applied to your accounts and is reducing your balances.
 
If you can give us a few of the details, we can better advise.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Message 2 of 2