Best Egg offer worth it or go 0% BT?

[Anonymous]

I have three cards:

• Card #1- 18% - 3700.00 balance with 5000.00 limit
• Card #2 - 19.5% - 8700.00 balance with 10K limit
• Card#3 - 19% - 2500.00 balance with 5K limit

 I have a few options now that my scores are up.  

• Received and checked a (soft pull) offer from Bestegg (see below)
• Have 0% CC for 15-18 month offers available
• None of the three cards below will lower thier rates for me on request 
• (Caveat:  I am NOT using these cards. AT ALL and have not and will not)

Questions:  

• IF I go with best egg and pay all THREE cards off would that boost my scores due to having more available and unused credit??
• Would it be better to do a 0% BT for all three and continue to pound them down?
• What if take 12.5K and pay off only the first two and BT the other??

 What would be the best move to boost my scores?

[DaveInAZ]

Well, for starters I think you're asking the wrong question. Instead of asking "What would be the best move to boost my scores?" you should be asking "What would be the best move to boost my personal finances?

Good credit scores are important for access to quality credit, but good personal finances are important to quality of life. And paying those kind of balances at those kind of interest rates are not good for your personal finances, you are throwing away far too much of your hard earned money to the big banks. And I'm not criticizing you, many of us here have been there, done that.

Now as for better personal finances I recommend the Best Egg over of $12,500 for 5 years, that will take care of the first two balances, and use the 0% BT offer for the third balance. The APR for the 5 year loan is only 1.5% higher than the 3 year loan, so I'd grab the 5 year. And the lower payments will enable you to make sure you pay off the 0% BT before the 0% expires, and pay off the Best Egg loan more quickly.

As for any boost for your scores, the action above will not quickly boost your scores. First, the CRAs, especially TU, hate personal loans. When I had a Prosper loan several years ago my TU Fico score always had in the negative comments "too many consumer loans", I just had the one so apparently one is too many for TU. Secondly, FICO stupidly (in my opinion) penalizes you for new installment loans, you will see a message "loan amounts too high" until you pay that Best Egg down under 50%. And Fico always penalizes you for any new credit account, so your score will take a hit for both the new Best Egg loan and the new 0% BT card.  But at least the penalty for new accounts lessens fairly quickly, as in 4-5 months. So, do the Best Egg loan & new 0% BT and your personal finances will improve quickly, a boost to your credit scores will take a bit longer.

Finally, remember utilization plays an important part in your credit scores. Fico grades utilization as follows:

0-9% Excellent
10-29% Good
30-49% Fair
50-74% Poor
75%+ Very Poor

That's for both overall utilization and also for each individual credit lines. I have a couple 0% CCs in the 30-49% range but since my overall util is 13% it doesn't hurt my score much. But I can tell you from personal experience that if you let any single credit line go over 50%, irregardless of overall util, you will take a significant hit to your score.

[JaseT]

Before taking out a loan with Best Egg (or any other lender) you may want to read this recent thread and how Best Egg can report as a CFA (consumer finance account):

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/I-have-the-dreaded-Consumer-Finance-reas...

[Anonymous]

GREAT advice on both posts!   Thank you both... continued/more advice here is more than welcomed!

[DaveInAZ]

Yeah, the consumer loan flag is annoying, but I'm not sure how much it hurts your score. Back when I had that consumer loan flag I also had the accounts I included in my 2010 BK showing, I got my big boost in score when those fell off at 7 years, which was also about the time I paid off Prosper.

The "big" personal loan companies - Best Egg, Prosper, Lending Club, etc. - will all show as consumer loans since that's their primary business. Yoiu might check Marcus since personal loans are a very small part of what Goldman Sachs does. Also you might check Discover & American Express, but I'm not sure those are soft pulls to quote you a rate.

[Anonymous]

Ok thanks.  I have other posts here regarding a vehicle  loan that is my priority to refinance.  I believe this may help in THIS particular decision.

My scores continue to climb.  I JUST got notification that yet another of my 4 late payments was removed.  

Vehicle loan is 15.5% on 63K - Orignated Nov 2018. (I was well aware and knew I would refi this)

• The credit union that financed the vehicle is more than willing to work with me.  He sent me the internal credit union loan chart.  
• Today, they can refinance the loan at 6.25 / 6.1% depending on length of term.  
• Once I click into 720 and above I'm at 4.9/5.3.  
• Once my scores go over 740 it gets better as I'm sure you all very well know.  

If mess with a Consumer Credit Loan and/or another CC... BEFORE this vehicle refinance, scores drop = delaying vehicle refi at those rates!   

Correct?

Leaving things sit and continue to pound on the cards as I have, my score over the next 2-3 months will be (should be) well over 720.  It's quite possible that they may get into 740...

This, no doubt, changes the strategy correct??

[Anonymous]

JaseT - WOW! That thread certainly shines a 4000 Luemen light on things!  Wow!  I am glad I read that! 

Thank you.... I will NOT be doing best egg, if I do anything now it will be through my CU only after I refi that car loan I mentioned.

Thanks again... this is why I love this place! GREAT info. Thank you all and please, as always, keep it coming!

[DaveInAZ]

---

@Anonymous wrote:

Ok thanks.  I have other posts here regarding a vehicle  loan that is my priority to refinance.  I believe this may help in THIS particular decision.

My scores continue to climb.  I JUST got notification that yet another of my 4 late payments was removed.  

Vehicle loan is 15.5% on 63K - Orignated Nov 2018. (I was well aware and knew I would refi this)

• The credit union that financed the vehicle is more than willing to work with me.  He sent me the internal credit union loan chart.  
• Today, they can refinance the loan at 6.25 / 6.1% depending on length of term.  
• Once I click into 720 and above I'm at 4.9/5.3.  
• Once my scores go over 740 it gets better as I'm sure you all very well know.  

If mess with a Consumer Credit Loan and/or another CC... BEFORE this vehicle refinance, scores drop = delaying vehicle refi at those rates!   

Correct?

Leaving things sit and continue to pound on the cards as I have, my score over the next 2-3 months will be (should be) well over 720.  It's quite possible that they may get into 740...

This, no doubt, changes the strategy correct??

---

Ah yes, game changer! I don't want to think about the payments & interest on a 63K car loan at 15.3%!

As I said, any single credit line over 50% is a big hit to your score, so I would pound away on those CCs as the fastest way to boost your score so you can refi the car loan at a much better rate. Card #3 is the easiest, just pay $100 to get it down to $2400 for a 48% utilization. Then card #1, pay $1300 on it to get it down to 48%. Card #2 will take the most $$$ to get it down to under 50%, $3800, so pay down cards #1 & 3 and see what it does for your score. 720 is really all you need to get the best car loan rate from most lenders, my EQ score was 722 when I got a $15k loan from DCU for 65 months at 2.99% in Sept. 2017, their best rate now is 3.74%.

BTW, I also read though that CFA thread. Any negative refererence to my CFA Prosper loan disappeared after I paid it off, it just shows as a paid installment loan on my credit report, no mention of it being a CFA account. And BTW I paid it off less than halfway through with a 0% BT on a new CC, saving hundreds in interest. But worry about saving interest on CCs later, get their utilzation down under 50% as the fastest way to boost your score to get a much better rate on your car loan.

[Anonymous]

Ok.... AWESOME!  NO we are talking a plan!

Card #3 is the easiest, just pay $100  - I will pay 200 on it right now!  (done)

Then card #1, pay $1300  -  I will pay 900 on that today!  Then next week another 500.  BAM!!! 

THanks DaveinAZ!  I will keep everyone posted!

[DaveInAZ]

Great, sounds like a plan! Most CCs report the new balance on the day of a new statement, and then it can take a week or so for your credit report to show the new lower balances, so check your credit scores then.