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Personal Loan Vs Credit card

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Personal Loan Vs Credit card

Hi guys,

 

I have the opportunity to pay off the majority of my Personal Loan or Credit card bills. I am looking for advice to see which one I should pay off more. Which one will be good to pay off first? Which on will help me for future CLI when I pay some of my debt? Which one will boost my credit score? Any suggestions or personal experience will help me decide which one I can pay off more to benefit my credit overall.

 

Thanks,

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Re: Personal Loan Vs Credit card

Have you considered paying off the one(s) that would be the smartest financial move in terms of reducing/eliminating interest that you're paying?  That should always be Priority Number One above anything else.  Unless you've got 0% offer(s) on your CC(s) chances are you're paying more interest on your card(s) than you are from your loan, so it would make the most financial sense to pay down your cards.

 

The good news as well in terms of Fico scoring is that paying down revolving debt the majority of the time is going to positively impact scores greater than paying down installment loan debt.  All that being said, paying down revolving debt over a loan most of the time will result in a win-win in terms of both a financial win (less interest paid) and a Fico win (greater scores).

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Super Contributor

Re: Personal Loan Vs Credit card


@CaneNation305 wrote:

Hi guys,

 

I have the opportunity to pay off the majority of my Personal Loan or Credit card bills. I am looking for advice to see which one I should pay off more. Which one will be good to pay off first? Which on will help me for future CLI when I pay some of my debt? Which one will boost my credit score? Any suggestions or personal experience will help me decide which one I can pay off more to benefit my credit overall.

 

Thanks,


From a FICO score perspective, paying off the credit card bills is more important.

 


Total revolving limits 644000 (568000 reporting)
FICO 8's EQ 710 TU 733 EX 717



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Established Contributor

Re: Personal Loan Vs Credit card

If you’re paying higher interest on the credit cards, definitely pay the cards down. Work on the highest interest first, but also make sure you’re not maxing any of the cards either. If the cards are at 0%, then paying the loan makes sense, but if you completely pay it off, there will be a score drop. Paying it to 8.9% or less will give you a score boost.


February 2020:


Stats:
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