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One installment loan vs three credit cards with balances? Need Advice

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Established Contributor

One installment loan vs three credit cards with balances? Need Advice

I have three cards with 0% APR but I am tired of sending them $1k each.

I can get an installment loan at 2.25%.

I do have the $ available to pay them off but would rather take my time @ 2.25.

I have one installment loan (Acura Lease) now this will report as a second. I guess it will show just like another car?

Thanks in advance.

Discharged BK7 - 7.16.15
Current Fico8 - (11.28.19) EX - 660/EQ - 669/TU - 671
Total CL - $229,000.
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Frequent Contributor

Re: One installment loan vs three credit cards with balances? Need Advice

It'll sort of show up like a car, more or less. Different scoring models might treat it differently than a car loan.

 

The impact that adding such a loan to your report will have, depends on other factors. What's your current utilization % getting reported every month? If your Util% is already low, then this installment loan debt consolidation probably won't affect your score much, it might actually drop it some (younger average age of accounts & age of newest account). But if you utilization is high, like over 20-30%, then your score might go up. But of course, nothing is certain.

 

Sounds like a good overall financial move though, unless you're planning on getting a mortgage in the next few months with scores that aren't well into the top tier already. A few points can matter a lot with a mortgage, but if a new mortgage isn't in your plans then I wouldn't stress about the +/- 10 points this loan might change, sounds like the money you'll save on interest makes it well worth it.

    Total CL: $21,100
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
09/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
7 derog. (all settled 1/2019)     |     Inquiries: 1, 4, 5     |     AoOA: 10.2yr     |     AAoA: 5.4yr     |     AoYA: 0.6yr
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Super Contributor

Re: One installment loan vs three credit cards with balances? Need Advice


@tussking wrote:

I have three cards with 0% APR but I am tired of sending them $1k each.

I can get an installment loan at 2.25%.

I do have the $ available to pay them off but would rather take my time @ 2.25.

I have one installment loan (Acura Lease) now this will report as a second. I guess it will show just like another car?

Thanks in advance.


If I were you I would, in order of preference,

(a) pay them off, or

(b) just let them ride.

 

I wouldn't take out a new loan for no good reason, which

IMHO is what you would be doing, thus invoking (a) a  hard

pull (b) a lower average age of accounts (c) a reset of

age of youngest account and (d) adding another to my

overall accounts.


Total revolving limits 732500 (606000 reporting) 12/4/20 FICO 8 scores: EQ 715 TU 760 EX 735
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