Consolidating credit, good or bad?

Anonymous · ‎05-12-2012

Just looking for some opinions here, right now between a car loan, a personal loan, and a few credit cards I have just over $10,000 in debt. With us just moving and having a new baby I am really struggling to make my payments on time. Would it hurt my credit to apply for a loan and pay them all off and just have one monthly payment or should I just try and stick it out? I have worked really hard to get my credit score to where it is now and I don't want to mess it up!! Any opinions? Thanks

Anonymous · ‎05-12-2012

I have no problem with condolidation loans, as long as you don't plan to run up the credit cards again.

And that's the biggest and most frequent problem I've witness clients/customers do. They will get a fixed rate loan, consolidate all of their bills, and then run up thousands again on their CC's. And then you're back to square one. You have a consolidation loan to pay off, and more CC's. And then, what was the point?

Do it if you KNOW you will be disciplined not only with the payments but disciplined with NOT spending additional money you don't have.

Or else, you're just replacing debt with debt.

marty56 · ‎05-12-2012

As a former owner of a whole lot of CC debt, I can tell you that you need to be honest with yourself before doing this. If your CC spending was mostly for non-essential stuff, then the odds of being successful is low. You must be willing to not use the CCs again until the loan is PIF. If you do not feel you can be disciplined enough do that, then I would just stick it out.

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Anonymous · ‎05-12-2012

What does your FICO scores look like right now? Also, I would think an auto loan would have lower interest rate than personal loan.

Anonymous · ‎06-01-2012

Yea the interest rates are lower for the car loan, and most of what is on my cc' s were things for the new baby. And I've already given my cc's to a family member to hang on to so I can not use them at all!

Anonymous · ‎06-01-2012

@Anonymous wrote:
... They will get a fixed rate loan, consolidate all of their bills, and then run up thousands again on their CC's. And then you're back to square one...

Or usually worse.

Manda, it can certainly be a good plan. Can you share the details of your current debts? APR, CL, Balance, etc? Maybe you can do a tandem of "picking off" one or two of the accounts and also getting a consolidation loan?

EDIT: Is the car note the bulk of the $10k? If so, then maybe a simple auto re-fi could be an option as well.