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So, I have about $10,000 in credit card debt. I was thinking about getting a debt consolidation loan to pay them off and shut them down, not close out but just not use them. I want to apply for a mortgage in March 2014, and I don't want to have problems with a new line of credit decreasing my score or causing problems for the being accepted. I have money saved for the house, but I don't want to deplete that paying off credit cards because then I won't have enough for down payment. My credit union suggested a debt consolidation loan for 5 years for $175 per month which is cheaper than what I am paying on these cards.
What should I do? Debt consolidation loan? How much will this decrease my score?
From my wife and I's own personal experience- neither of us were AUs on each others cards- we waited to buy the house and just used the cash we had to pay down our CC's- I know it's not what you want in the short run- but in the long run it may make for more purchase power on your house with not having a debt consolidation loan.
Then I guess you answered your own question didn't you....?
getting the loan will probably positively affect your score, if not immediately than once a few months pass. It'll help with your utilization, but at the cost of lower AAoA and a new account. But if u want to do it, u should do it soon so it ages a while before u apply for a mortgage
If there are two things that I have come to know about people, it is that they don't like upfront costs, say a monthly bus pass instead of paying cash every day, and that they don't like to be regulated, say being told a bottle of soda can be only so big. You can make of this what you like, but for the discussion here it helps to take a step back and be reminded that debt is not the problem, it is the symptom. Debt consolidation will not work unless you look at yourself and figure out how the credit card debt escalated, so that it will not continue in the future. Once that is settled, you may get past the lender weariness of other monthly installment payments.