Hello. So I'm trying to figure out if I should refinance my student loans BEFORE I apply for another credit card or the other way around.
I recently paid off a charged-off credit card (Capital One) by settling in full with a collection company. The collection company agreed to request to have the tradeline deleted from the bureaus so that it wont have any negative affect as a "Settled in full". I now have no other outstanding issues on my credit at all, but a few missed payments from some years back. So I feel that I'm now in a position to both comfortably apply to refinance my student loans and for another credit credit with good benefits and rewards.
What I'm contemplating is which strategy I should use:
A.) Apply for another credit card to increase my total line of credit (currently just under $2,000, consisting of 2 secured cards and 1 store card), thus increasing "creditworthiness" to help with the student loan refinance approval. My credit is a lot better again and I'm receiving more offers, but the combined credit limit is too low and the refinancing companies might feel that a lower total credit card line means that you're not working with enough credit to be eligible. OR
B.) Apply for the student loan refinance to fix the "Proportion of loan balances to loan amounts is too high" factor that negatively affected my approvals some time back then apply for the credit card. The reason it says that is because my original loan amounts with Sallie Mae (Navient) was only about $19,000, but after some capitalizations and high interest (nearly 11%), it's now at $39,000. I have separate federal loans, but I'm not refinancing those right now since the interest rates on those are low and they have way more benefits.
So should I increase total credit line by applying for another credit card then refinance student loans, or refinance student loans then apply for another credit card? My highest credit score as of right now is just above 700, but some of the credit bureaus and scoring models have my score a bit below that at the moment. Both have to be done though because I would like another credit card with better rewards and features and I would certainly need these nefarious student loans refinanced to a lower interest rate, any lower interest rate. I would just like to know in which order. Thanks.
Starting Score: 597
I think you should go in order of priority. Assuming the SLs are most important (which, IMO, they should be, as you are paying lots of interest), I'd focus on the refinance first. Don't worry about having "low credit limits." Lenders don't care so much about how high your limits are, but rather how much of that limit you use both raw dollar-wise and percentage-wise and whether it's paid on time.
I would think student loans would not be so picky about other loan types. Then again, I have no idea what I'm talking about.
I think the "safe" advice would be to pick one then wait a few months to do the other.
@Sorainzo wrote:Hello. So I'm trying to figure out if I should refinance my student loans BEFORE I apply for another credit card or the other way around.I recently paid off a charged-off credit card (Capital One) by settling in full with a collection company. The collection company agreed to request to have the tradeline deleted from the bureaus so that it wont have any negative affect as a "Settled in full". I now have no other outstanding issues on my credit at all, but a few missed payments from some years back. So I feel that I'm now in a position to both comfortably apply to refinance my student loans and for another credit credit with good benefits and rewards.What I'm contemplating is which strategy I should use:A.) Apply for another credit card to increase my total line of credit (currently just under $2,000, consisting of 2 secured cards and 1 store card), thus increasing "creditworthiness" to help with the student loan refinance approval. My credit is a lot better again and I'm receiving more offers, but the combined credit limit is too low and the refinancing companies might feel that a lower total credit card line means that you're not working with enough credit to be eligible. ORB.) Apply for the student loan refinance to fix the "Proportion of loan balances to loan amounts is too high" factor that negatively affected my approvals some time back then apply for the credit card. The reason it says that is because my original loan amounts with Sallie Mae (Navient) was only about $19,000, but after some capitalizations and high interest (nearly 11%), it's now at $39,000. I have separate federal loans, but I'm not refinancing those right now since the interest rates on those are low and they have way more benefits.So should I increase total credit line by applying for another credit card then refinance student loans, or refinance student loans then apply for another credit card? My highest credit score as of right now is just above 700, but some of the credit bureaus and scoring models have my score a bit below that at the moment. Both have to be done though because I would like another credit card with better rewards and features and I would certainly need these nefarious student loans refinanced to a lower interest rate, any lower interest rate. I would just like to know in which order. Thanks.
1. Applying for a credit card doesn't help your creditworthiness in any way; it will more likely lower your scores.
2. Refinancing the student loan won't help the "Proportion of loan balances" issue at all. It will make it worse, not better.
So no, the things you're thinking of doing would have the opposite effect you're looking for.
If you want to help yourself, pay things down as best you can.
If you can save interest by refinancing then it's your call on what to do, but don't have any expectation of it helping your credit scores.
