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Here's a simple way to think about it, which is to take credit scoring completely out of the mix. Instead, treat it as a purely financial issue.
Shop around and find out what interest rates you are likely to get, given your current scores. You'll end up with a number. Suppose it is a 9% loan. (Just picking that number at random.) Take 9% of 30k. Then divide that by 12. That's how much interest you will pay on your loan on the first month.
Then look at what you have paid on interest total on all your credit cards in the last month.
Then compare those two numbers. If the loan is saving you a lot of money -- enough that you feel really good about doing it -- then get the loan.
Otherwise, just keep your head down, pay off the highest interest cards first, etc.
As far as scores go, I think you will come out ahead on the loan, but not by much. The negative factors SouthJ gave you. But that will be counterbalanced in all likehood by creating a 1% total utilization with most of your cards reporting $0.
As SouthJ and I said, this is only a good idea if you are SURE you will keep all cards at $0 except one with the remaining card reporting a small balance each month. If you feel you would be at risk for using your cards a lot again, this is not a good idea.
SouthJ also rightly warns you to use a major reputable lender, like a CU. He's right that it is very important not to get a lender that might be tagged by FICO as a Finance Company.
Discover is a well establsihed bank, but SouthJ and I have a general allergy to groups like Lending Club and Prosper. They don't feel like well established banks and credit unions, so I have less confidence how they will be perceived by FICO. Remember that FICO's punishment of finance company accounts is one of the least publicized aspects of what they do. So, much of the time, all one has to go on is a gut feeling.
Here is one thread of many that has some discussion of this:
+1 on what Credit guy and south jam said. great advice.
Thank you guys for all the great advice I really appreciate it. I was gonna check out some websites and see what rates im offered since all they do is a soft pull. As I was gonna do this than I read somewhere about CD secured loans. They offer these loans at around 2-3 percent interest. I have a $15,000 CD that I opened a couple of months ago. I did not realize you can borrow against it and even improve my credit score at the same time. Do you guys think this would be a great idea? Thanks again
I am really puzzled, buddy. I have gone back over the thread and these two facts are what are jumping out at me:
(1) You have about 18k of extremely high-interest CC debt. My guess is that the interest rate may be 15% or 18% or possibly more.
(2) You have a CD for 15k, paying you presumably 1.5% or maybe 2%. On that interest you have to pay income taxes, so your real return is very low, not much more than 1%.
How did both things happen? The CD is about the worst possible choice for that 15k right now. By about a trillion miles, the better place for that cash is to use it to pay off your highest interest CC cards.
The typical penalty for breaking a CD before it matures is six months worth of interest. (That's for a CD that has a term of at least 12 months.) I encourage you to sit down and crunch all the numbers. You will likely discover that the correct choice (among your various options) is to cash in the CD, paying the 6-month penalty, and then pay off your highest interest cards. Then continue to pay down all remaining debt.
One of the takeaway lessons from this is that Awesome 0% Introductory Rates are worthless in an economy where the interest rates are already extremely low. They induce you to spend money and place you at risk if you forget the day that the 0% agreement expires. People should avail themselves of these with great care and with plans to pay them off far sooner than they think they need to.
On a personal note, I cannot tell you how many of these 0% offers I get. They seem to be the default for every new credit card I open. I have carried a balance on only one of these cards and then for only two months. Even that made me uncomfortable.
good advice from credit guy.
Not sure i would use whole 15k to pay down debt. maybe keep 3-5k in savings to have some dry powder in case OP needs liquid cash in future...car breaks down and so.