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Consolidating CC debt into personal and auto loan to increase FICO score.

redwalker2929
Regular Contributor

Consolidating CC debt into personal and auto loan to increase FICO score.

I have just consolidated 32K of CC debt into an auto loan and personal loan for 4% and 9%. I'm expecting to see a credit score increse of 60-90 points! I thought I would post this for those of you considering a similar action. I will be applying for a morgage in 4 months and found this to be my best option. I have perfect payment history with an average account age of 6 years and the oldest 11 years. I was at 98% utilization. I am closing 4 accounts and leaving 5 open to mainatin same credit length hisory. I will have a credit utilization of 6.3% once all payments are posted. After my credit score increse, I will be eligable for rate reduction to 2.1% and 8.9% but will wait until after closing as this will involve a hard credit inquiry and a new account opening. I weighed the pros and cons of taking unsecured debt and rolling it into secured. Getting a lower morgage rate far outweighs the cons of 15K secured debt. My curent FICO scores are 635,634,655. I will keep you posted on the results! Wish me luck!!

Message 1 of 10
9 REPLIES 9
Appleman
Valued Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

You will get a score boost for sure, how much remains to be seen.

 

In September 2015 Discover Card listed my FICO score as 719 and in early August of 2016 it sits at 814.

I have eliminated most credit card debt, still have a bit that is low/no interest.

I refinanced the mortgage saving quite a bit in interest.

 

I think you are spot on with the moves you make and I look forward to watching your success.

Not sure if you needed to close the other cards but if it works for you good deal!

Message 2 of 10
redwalker2929
Regular Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

Thanks Appleman! The credit union actually required me to close some accounts in order to approve the loan. I was able to keep all my favorite cards and dump the unfavorable ones. The 18th of this month is a big day as three of the cards will report the new zero blance and the remainder by the 24th. Since most CC companies don't allow overpament through their onloine site, I'm finding that using my credit union online bill pay is a good option to overpay on these acounts to ensure a zero balance once the intrest is applied on the statement close date.

Message 3 of 10
julie5
Frequent Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

great post...
Thanks redwalker..
I think many of us have good credit...and this is a great example of shuffling debt around for the better

Message 4 of 10
redwalker2929
Regular Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

UPDATE!!!!!! Approximately half of my CC balances have updated with all 3 bureaus. My scores have been updates as follows: Equifax:694, Transunion: 696, Experien: 718. Thats an 60, 40,  and 84 point increase!! I will be following up on here with my final credit scores. Feel free to ask any questions if your considering a simalar action. 

Message 5 of 10
NYFan63
Established Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.


@redwalker2929 wrote:

UPDATE!!!!!! Approximately half of my CC balances have updated with all 3 bureaus. My scores have been updates as follows: Equifax:694, Transunion: 696, Experien: 718. Thats an 60, 40,  and 84 point increase!! I will be following up on here with my final credit scores. Feel free to ask any questions if your considering a simalar action. 


Congrats Redwalker.  I have done something similar.  I was approved for a HELOC from Andrews FCU and have been using to pay down my CC balances.  I am wondering if this will help my scores even though I am using my HELOC which is a revolving LOC?? 

 

Thanks in advance.

Penfed Platinum Sig Visa $33k, PenFed PLOC $25k, NFCU Cash VISA Sig 22k, NFCU Visa Flagship 22k, CAP1 Venture $23k, CAP1 Venture One $15k, NFCU NAV Check $15k, Barclays Arrival $13,2k, DCU VISA 5k, Cap1 QS 7.5k, WF Finance 3.5k, Merrick 2.2k, Barclays Apple Financing 6.1k BestBuy 5k >Ch7 BK filed 8/09; DC 01/10 EQ 636 Nov 13;
EQ08 718 | TU 731 | EXP 728
Inqs: EQ 11, TU 8, EXP 11(last 2 yrs)
Goal 750+ In the Garden til

Message 6 of 10
redwalker2929
Regular Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

FINAL UPDATE!!!!!!

My total increse in credit score averaged to be 150 points!!!!!!!!! EQ:788, TU: 786, EX: 804. My partner had the same results. We were able to quialify for our home with only using his income!! As a treat to myself, I applied and was approved for the AMEX platinum charge cards, 6K credit line increase on Amex Blue, and lowered Intrest rate on all Amex cards!!! Please let me know if I can answer any questions!!

Message 7 of 10
Cobra2015
New Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

Congratulations that is amazing. Wish I could quailfy for a personal loan to consolidate our cc's.
Message 8 of 10
CreditAnalyst1981
New Member

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

Great to hear about those score jumps.  I just did the same thing and came here looking for exactly this information.

 

My situation:  Scores from 593 (CapOne Vantage 3) to 734 (Ex Fico8 from Amex).  Mostly these have been between 660 and 720.

 

I have never missed a payment and have a fairly long and varied credit history.  Mortgage, student loans, 5 credit cards, 2 car loans (one is a lease).  Average is around 7 years, oldest is 13.  No negative dings.

 

Now, the part you've all been waiting for (or expecting), credit limit on cards is $83,000 with ~98% utilization.  I support a family of 5 by myself with high income and higher expenses.  I just took out a personal loan from SoFi for $80k and have paid my CCs off.  The rate is 8% fixed, about half the weighted average CC rate.

 

This will save me almost $500/month in interest and reduce my payment by about the same.  More importantly, I am hoping for a meaningful jump in my credit score which hopefully can translate into further savings.

 

I pay 4.25% on my conventional conforming mortgage.  Hoping to lop 50-75bps off of that payment which should translate to another $150-200 in monthly savings.  I'm paying way too much on a Honda Pilot lease as well because of my lower credit score when I leased it.  That rolls off in a year and I'll hope to get a new one (or similar) with a lower monthly payment as well.

 

Here's a question for you guys... SoFi advertises personal loans with fixed rates as low as 6.0%.  I wonder if they would let me refi the personal loan in a couple months when (hopefully) my credit has moved from ~680 to ~750/760.  Could probably drop the payment by ~$100/month.  They have no prepayment penalties or origination fees, so I'm curious.  Or maybe I just try to take out a new loan for as much as I can and use it to pay down a portion of the existing loan?

Message 9 of 10
RobertEG
Legendary Contributor

Re: Consolidating CC debt into personal and auto loan to increase FICO score.

How did you consolidate CC debt under an auto loan?

An auto loan is made for purchase of a vehicle for which the creditor can impose a lien.

If the loan is used for other purposes, there are problems with a lien posted on a vehicle for that amount.

Seems kinda ...........

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