@Anonymous wrote:
Honestly, I think paying off debt (loans?) with a loan is a very bad idea. Plus, it won't exactly help your credit score. If you needed to run up your credit cards, why not ask for higher limits? With your score, it shouldn't be too huge of an issue. Also, you can use your husbands income on most of these applications; most want your household income, not just individual. I have the feeling your husbands score will really hurt you if you try to do a joint loan.
You wouldn't think getting more debt would help your credit score. Actually, in this scenario, it can. Consider the following scenario, involving a woman named Jill who has a credit score of 597 and the following accounts:
Visa: $1456 charged on a $1500 limit
MC: $988 charged on a $1000 limit
Target: $277 charged, $300 limit
Wamu MC: $1897 charged on a $2000 limit.
Jill is maxed out, with a util in the 90+% range. That utilization alone will cost her 60 to 85 FICO points.
Now, Jill takes out an installment loan for $5000. She uses the loan to pay down the CCs. After this processes, her credit report looks like this:
Visa: $0 charged on a $1500 limit
MC: $18 charged on a $1000 limit
Target: $0 charged on a $300 limit
Wamu: $11 charged on a $2000 limit
Installment loan for $5000, paid on time.
To FICO, the second credit report looks oh so much better than the first. Only half the cards are even carrying balances, and the half that are have a utilization in the low single digits. Plus, an installment loan is now present, broadening the consumer's credit mix. Jill's score would probably be around 660 to 685 after these changes.
Strange, but that's how the FICO game is played. So yes, if you have the chance to take out an installment loan and pay off CC balances, do so! Just be sure you don't charge the CCs up again. A cheeseburger every other month on half the cards, and that's it.
