topic Re: Which route to take? in Personal Finance

Which route to take? Personal Loan?

steelholder — Thu, 16 Sep 2021 23:38:40 GMT

I'm hoping to reduce credit card debt with a personal loan. My total debt is around 12k spread around 10 credit cards. My utilization is around 12% and my credit score is around 720-740. I'm being charged a pretty high interest rate from every CC every month and was hoping to consolidate this by making one single payment with a lower rate. Would a personal low interest loan be the best option? Something around 9 or 10% for 24 months? What other options are out there to help me reduce paying so much interest? Ive heard of balance transfers but is that only for a single credit card? Thanks all!

Re: Which route to take?

RSX — Mon, 11 Jan 2021 22:17:33 GMT

a personal loan is perfect for your situation - and with a 720-740, you should get lower than 9-10%

check Lending Club - i have had good luck with them

avoid OneMain - they have high % no matter what your score is

Re: Which route to take?

steelholder — Mon, 11 Jan 2021 22:22:28 GMT

Thank you RSX, I thought 9% was good, around what rate could be expected with my score? Need wallet shows their rates begin at 10%.

Re: Which route to take?

RSX — Mon, 11 Jan 2021 22:33:27 GMT

not knowing the total amount or anything beyond your credit score, i would guess 6-7%

you can model the loan once you ask for the total amount - they will give options for different pay down duration, and the rate moves accordingly

ask for slightly more than you need - you can always lower it if you decide to

only negative is there is an origination fee - but their service and rates have more than made up for it for me

Also, i used Lightstream once and was happy with their service and rates as well

Re: Which route to take?

barca — Mon, 11 Jan 2021 22:31:12 GMT

try many lenders that have soft pull.

Most of the lenders will do soft pull and you can see your rates.

Sofi, Discover, Lending club , Prosper, quicken etc.

make sure it specify soft pull, before you go ahead.

Re: Which route to take?

Anonymous — Mon, 11 Jan 2021 22:40:08 GMT

I would honestly check for BT offers among existing creditors before taking a personal loan. Personal loans not only make a new trade line but a good bit of them are designated as consumer finance companies (you risk this with any of them that aren't coming from a bank or CU especially) which is an added score penalty until they drop off your report. If you don't have BT offers, start checking with your existing creditors and see if they offer personal loans. For example Discover has a personal loan that starts at 6.9% and US Bank starts at 6.49%. Many CUs have great personal loan rates too. Sofi, Lending Club, etc should be your last resort.

Re: Which route to take?

steelholder — Mon, 11 Jan 2021 22:50:39 GMT

@Anonymous wrote:
I would honestly check for BT offers among existing creditors before taking a personal loan. Personal loans not only make a new trade line but a good bit of them are designated as consumer finance companies (you risk this with any of them that aren't coming from a bank or CU especially) which is an added score penalty until they drop off your report. If you don't have BT offers, start checking with your existing creditors and see if they offer personal loans. For example Discover has a personal loan that starts at 6.9% and US Bank starts at 6.49%. Many CUs have great personal loan rates too. Sofi, Lending Club, etc should be your last resort.

I am member of Alliant and Navy fed, im not sure if I understood correctly but if I get a loan from them or any other company its a ding on my credit right?

Re: Which route to take?

CYBERSAM — Mon, 11 Jan 2021 23:09:30 GMT

@steelholder "Would a personal low interest loan be the best option? " YES

I did the same thing and may scores jumped to 800.

Try CUs. I had few CC with 20+ interest rate and after getting PL, now I'm at mid 6%

Look for DCU, Penfed, Service CU. etc

You should be able to get a good rate. Try not to app just because, look at all the fine lines and pick the one that you want to go with.

Also if your having hard time making payments, you can get a longer term PL to lower your monthly payment till you stabilize your finances! Knowing that you can pay them off anytime you want or pay double the payment is a good thing.

Good luck!

Re: Which route to take?

Anonymous — Tue, 12 Jan 2021 02:41:49 GMT

@steelholder wrote:
@Anonymous wrote:
I would honestly check for BT offers among existing creditors before taking a personal loan. Personal loans not only make a new trade line but a good bit of them are designated as consumer finance companies (you risk this with any of them that aren't coming from a bank or CU especially) which is an added score penalty until they drop off your report. If you don't have BT offers, start checking with your existing creditors and see if they offer personal loans. For example Discover has a personal loan that starts at 6.9% and US Bank starts at 6.49%. Many CUs have great personal loan rates too. Sofi, Lending Club, etc should be your last resort.
I am member of Alliant and Navy fed, im not sure if I understood correctly but if I get a loan from them or any other company its a ding on my credit right?

No you can get loans from Alliant and Navy because they're CUs. It's companies like SoFi, Lending Club, and Prosper that you want to avoid.

Re: Which route to take?

steelholder — Tue, 12 Jan 2021 06:37:15 GMT

@Anonymous wrote:
@steelholder wrote:
@Anonymous wrote:
I would honestly check for BT offers among existing creditors before taking a personal loan. Personal loans not only make a new trade line but a good bit of them are designated as consumer finance companies (you risk this with any of them that aren't coming from a bank or CU especially) which is an added score penalty until they drop off your report. If you don't have BT offers, start checking with your existing creditors and see if they offer personal loans. For example Discover has a personal loan that starts at 6.9% and US Bank starts at 6.49%. Many CUs have great personal loan rates too. Sofi, Lending Club, etc should be your last resort.
I am member of Alliant and Navy fed, im not sure if I understood correctly but if I get a loan from them or any other company its a ding on my credit right?
No you can get loans from Alliant and Navy because they're CUs. It's companies like SoFi, Lending Club, and Prosper that you want to avoid.

How is a a loan from a CU different than another type of lender on a credit report?

Re: Which route to take?

Anonymous — Tue, 12 Jan 2021 07:19:35 GMT

@steelholder wrote:
@Anonymous wrote:
@steelholder wrote:
@Anonymous wrote:
I would honestly check for BT offers among existing creditors before taking a personal loan. Personal loans not only make a new trade line but a good bit of them are designated as consumer finance companies (you risk this with any of them that aren't coming from a bank or CU especially) which is an added score penalty until they drop off your report. If you don't have BT offers, start checking with your existing creditors and see if they offer personal loans. For example Discover has a personal loan that starts at 6.9% and US Bank starts at 6.49%. Many CUs have great personal loan rates too. Sofi, Lending Club, etc should be your last resort.
I am member of Alliant and Navy fed, im not sure if I understood correctly but if I get a loan from them or any other company its a ding on my credit right?
No you can get loans from Alliant and Navy because they're CUs. It's companies like SoFi, Lending Club, and Prosper that you want to avoid.
How is a a loan from a CU different than another type of lender on a credit report?

If you get a loan and it's not from a bank or credit union, you run the risk of it being labeled a consumer finance account. It's a minor negative but it's a negative and costs points and it's extremely annoying knowing that I have at least 8 years to go before mine falls off my report from my Best Egg loan. Even some auto loans direct from the manufacturer get coded as CFAs.

Re: Which route to take?

Anonymous — Tue, 12 Jan 2021 07:23:23 GMT

Here is one of the numerous CFA threads we have around here.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/myFico-says-I-have-3-quot-Consumer-Finance-Accounts-quot-But-I/td-p/6047864

Re: Which route to take?

steelholder — Tue, 12 Jan 2021 17:39:35 GMT

@Anonymous
If you get a loan and it's not from a bank or credit union, you run the risk of it being labeled a consumer finance account. It's a minor negative but it's a negative and costs points and it's extremely annoying knowing that I have at least 8 years to go before mine falls off my report from my Best Egg loan. Even some auto loans direct from the manufacturer get coded as CFAs.

Thanks for this information what does it show up as when you get a loan from a CU or bank?

Re: Which route to take?

steelholder — Tue, 12 Jan 2021 20:45:11 GMT

Alliant CU seems to have good rates but they use vantage 4.0 and I've heard those scores could be much lower than the fico 8, kind of worried about thay, Navyfed is anywhere between 6%-16%. Could someone explain how a loan from a CU or bank differs from a lender ok your credit report?

Re: Which route to take?

RSX — Tue, 12 Jan 2021 21:08:33 GMT

on the report they both Look like a Loan - no issues there

but some of the lenders and car dealerships get flagged as a Consumer Finance Loan - it doesnt alway show on the account info

but in your 'Negatives' part of the report, it will say 'Too many Consumer Finance loans'

this is why most people have never heard of it, until it pops up

i am not sure how negative it is, but for sure avoid it if you can

Re: Which route to take?

Anonymous — Tue, 12 Jan 2021 23:18:49 GMT

@steelholder wrote:
Alliant CU seems to have good rates but they use vantage 4.0 and I've heard those scores could be much lower than the fico 8, kind of worried about thay, Navyfed is anywhere between 6%-16%. Could someone explain how a loan from a CU or bank differs from a lender ok your credit report?

Alliant doesn't use Vantage for actual lending decisions. They use FICO 9 IIRC.

The difference in reporting is, as RSX says, just in the FICO reason codes. It's infuriating because when you start optimizing scores, that's when it shows up. It's a little ding, somewhere around the value of 2 HPs worth of points, but it's a ding that sticks around until the account falls off your report. Take a 3 year loan, you're going to have that reason code at least 13 years.

Re: Which route to take?

steelholder — Wed, 13 Jan 2021 00:13:11 GMT

@Anonymous wrote:
@steelholder wrote:
Alliant CU seems to have good rates but they use vantage 4.0 and I've heard those scores could be much lower than the fico 8, kind of worried about thay, Navyfed is anywhere between 6%-16%. Could someone explain how a loan from a CU or bank differs from a lender ok your credit report?
Alliant doesn't use Vantage for actual lending decisions. They use FICO 9 IIRC.

The difference in reporting is, as RSX says, just in the FICO reason codes. It's infuriating because when you start optimizing scores, that's when it shows up. It's a little ding, somewhere around the value of 2 HPs worth of points, but it's a ding that sticks around until the account falls off your report. Take a 3 year loan, you're going to have that reason code at least 13 years.

According to an alliant loan officer I spoke with today, they do, started using it during the summer. There may be other threads on them pulling the 4.0 vantage.

Re: Which route to take?

Anonymous — Wed, 13 Jan 2021 02:31:22 GMT

@steelholder wrote:
@Anonymous wrote:
@steelholder wrote:
Alliant CU seems to have good rates but they use vantage 4.0 and I've heard those scores could be much lower than the fico 8, kind of worried about thay, Navyfed is anywhere between 6%-16%. Could someone explain how a loan from a CU or bank differs from a lender ok your credit report?
Alliant doesn't use Vantage for actual lending decisions. They use FICO 9 IIRC.

The difference in reporting is, as RSX says, just in the FICO reason codes. It's infuriating because when you start optimizing scores, that's when it shows up. It's a little ding, somewhere around the value of 2 HPs worth of points, but it's a ding that sticks around until the account falls off your report. Take a 3 year loan, you're going to have that reason code at least 13 years.
According to an alliant loan officer I spoke with today, they do, started using it during the summer. There may be other threads on them pulling the 4.0 vantage.

I do see other people saying they were told that they use Vantage but nobody has so far posted an approval or denial with a Vantage Score on it that I have seen.

In my experience my VS4 tracks closely to my VS3 as long as my credit card utilization is low. It's very sensitive to balances as it uses trending data so if you have a higher balance than your average the score drops.

My TU VS4 is at 787 right now while my TU VS3 is at 811.

Re: Which route to take?

steelholder — Wed, 13 Jan 2021 02:53:07 GMT

@Anonymous wrote:
@steelholder wrote:
@Anonymous wrote:
@steelholder wrote:
Alliant CU seems to have good rates but they use vantage 4.0 and I've heard those scores could be much lower than the fico 8, kind of worried about thay, Navyfed is anywhere between 6%-16%. Could someone explain how a loan from a CU or bank differs from a lender ok your credit report?
Alliant doesn't use Vantage for actual lending decisions. They use FICO 9 IIRC.

The difference in reporting is, as RSX says, just in the FICO reason codes. It's infuriating because when you start optimizing scores, that's when it shows up. It's a little ding, somewhere around the value of 2 HPs worth of points, but it's a ding that sticks around until the account falls off your report. Take a 3 year loan, you're going to have that reason code at least 13 years.
According to an alliant loan officer I spoke with today, they do, started using it during the summer. There may be other threads on them pulling the 4.0 vantage.
I do see other people saying they were told that they use Vantage but nobody has so far posted an approval or denial with a Vantage Score on it that I have seen.

In my experience my VS4 tracks closely to my VS3 as long as my credit card utilization is low. It's very sensitive to balances as it uses trending data so if you have a higher balance than your average the score drops.

My TU VS4 is at 787 right now while my TU VS3 is at 811.

How can you check your own vantage 4.0?

Re: Which route to take?

steelholder — Wed, 13 Jan 2021 20:47:37 GMT

Just want to confirm, if I get a loan from a CU, it will stay on my credit reports for 10 years after it is paid?