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Debt consolidation to eliminate high interest?

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Anonymous
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Debt consolidation to eliminate high interest?

Hi I had a quick question on debt consolidation.  I was wondering if it would be a good idea to consolidate all my credit cards into one payment by using a comapny such as lendingree etc.  Alot of my credit cards have all expired the 0% offer and I am paying alot of interest on them.  I am aware of the hard inquiry I would get by applying but if approved it wouldnt matter because I would use the funds to payoff all the credit cards and just focus on my new monthly payment with my new loan. My fico scores are 750 759 and 755.  Any input would be greatly appreciated.  Thank you guys for your help

Message 1 of 20
19 REPLIES 19
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

That can be a great choice.  It just needs to be coupled with a very clear plan that diagnoses how you ran up the CC debt in the past and makes sure that you are always paying in full (and keeping CC low) for the future.  Some people decide to put all their cards in a shoebox with a trusted loved one so that they simply have no access to them.  (You can do that while still keeping them active.)

 

The risk in debt consolidation via a personal loan can be if you do not develop that plan -- and therefore a year after the payoff run your cards back up.  Then you have a big installment loan debt and CC debt as well.

Message 2 of 20
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

Thank you so much for your response.  I definetely have a plan in place i am worried about how low my credit score will go down.  I really worked on getting it to 760 these past years and not sure where it will end up after applying.

 

Also would know any great places to start applying.  Sofi, lendingclub, marcus,  prosper, discover loans?  thank you so much for your help.

Message 3 of 20
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

I hope someone else can comment.  At this point you are really wanting to know how best to shop around for a personal loan to get the best rate, without incurring lots of inquiries.  I lack experience in that area.  What I always do (if I am looking for an auto loan, say) is call around and ask what their best rate is -- since my scores are high.

 

That may not apply to you.  There may be a way to get soft pull interest rate estimates at some lenders -- start a new thread in a week's time if no one else has chimed in.  Call it maybe How do I shop for a personal loan?

Message 4 of 20
krielly
Established Contributor

Re: Debt consolidation to eliminate high interest?

If your CC utilization is high, if anything, you should see a bump in FICO score.


You can't have your cake and eat it too. But you can dip your finger in the bowl and lick the icing!
Message 5 of 20
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

Hi and thank you so much for your response. My credit card Utilization is at 30%. So getting the personal loan/debt consolidation would actually boost it up. I did not know that. Thank you for that info!
Message 6 of 20
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

Just to be clear, Actually getting Approved for this loan will imporve my credit score??

 

Thanks

Message 7 of 20
SouthJamaica
Mega Contributor

Re: Debt consolidation to eliminate high interest?


@Anonymous wrote:

Hi I had a quick question on debt consolidation.  I was wondering if it would be a good idea to consolidate all my credit cards into one payment by using a comapny such as lendingree etc.  Alot of my credit cards have all expired the 0% offer and I am paying alot of interest on them.  I am aware of the hard inquiry I would get by applying but if approved it wouldnt matter because I would use the funds to payoff all the credit cards and just focus on my new monthly payment with my new loan. My fico scores are 750 759 and 755.  Any input would be greatly appreciated.  Thank you guys for your help


Personally I don't think it's a good idea unless you're able to really stop using the cards.

 

If you do go ahead with it I think you should use a credit union rather than one of those consumer finance companies.


Total revolving limits 657200 (536700 reporting) FICO 8: EQ 712 TU 710 EX 708

Message 8 of 20
SouthJamaica
Mega Contributor

Re: Debt consolidation to eliminate high interest?


@Anonymous wrote:

Just to be clear, Actually getting Approved for this loan will imporve my credit score??

 

Thanks


No that's not true.

 

If you get a loan,

 

(a) you might pick up some points for 'credit mix' if you don't currently have any installment loans

(b) you'll lose points for having a 100% utilization loan

(c) you'll lose points for the inquiry

(d) you'll lose points for the age of newest account being shortened

(e) you'll lose points for the reduction in average age of accounts

(f) if you go with a CFA rather than a bank or credit union you may lose points for that

 

As to whether you will have a net gain or loss, no one can say with certainty, but it's highly likely IMHO that you'll have a substantial net loss, at least in the near term.

 

IMHO you should just bite the bullet and pay your cards down. Stop using the cards if you need to do that.


Total revolving limits 657200 (536700 reporting) FICO 8: EQ 712 TU 710 EX 708

Message 9 of 20
Anonymous
Not applicable

Re: Debt consolidation to eliminate high interest?

Thank you for taking the time and helping me.  Thanks for that info it makes absolute sense.  I didn't know there are many ways you could lose points. As far as my credit cards go I have been paying them down. It's just that I'm paying so much interest on them. Each card which is about 12 of them, I'm paying around 30-60 in Interrst a month and that is too much.  I wanted maybe to take a loan for 30,000  from let's say discover ,sofi, or lending club and maybe use 18,000 and pay them off. 

Message 10 of 20
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