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Here is a problem that I see. One you would have the following affect your fico score.
1. Recent inquiry
2. New account opened
3. New account with a high balance
4. When opening a new account you bring down the average account age.
The other thing is that you need to look at the other factors that are on your credit report. How many inquiries were put on the report within the last 12 months?
All these are things that the score does look at. There are several reason codes that determine then risk factor.
@Anonymous wrote:
Thanks for your reply creditbob, thats kinda what i was wondering if the good would out weigh the bad...i know credit util is like %30 percent of score and i dont have an installment loan either so didnt know if it would help that way since diff kinds of credit matter also. Plus since its an installment loan didnt know if it reports as high balance like credit card or?
Rolling credit card debt into an installment loan can sometimes help. The biggest issue is that many people who do that then continue on spending the same way as always and simply run their credit cards back up. Then...they've got the credit card debt back plus an installment loan payment, digging themselves into an even deeper hole.
An installment loan does report differently and is not counted into your credit utilization percentage. It's a good idea only if you can put the credit cards away. I have read on these forums that, sometimes, the bank or credit union that gives you the installment loan will make you close the credit cards. You do want to stay away from finance companies if you can.
It takes a very disciplined person to make this work.
Generally it is not a good idea to move debt around. As Lynette says it requires discipline to do. You must be willing to sock drawer the cards and just use them to maintain activity, charging very small amounts and PIF'ing each month.
Back in the days when I had tons of CC debt, I lacked the discipline, to do that and my only way out short of BK was a DMP program. You have to be honest with yourself and if there is even the smallest doubt you can keep from running the balances up again, I would not do it and go to a more extreme method to break the CC debt cycle like just closing the cards or even DMP program.