loan to pay off cc's????

[Anonymous]

would it be wise to tale out a personal  (if they will give it to me) for $24000 to pay off my credit cards? Will it affect my fico score? If so who would give me one???

[Anonymous]

IMHO*** I do NOT think that taking out a loan to pay off another is a wise decision Why don't you try calling or writing your creditors and asking for lower rates (which will lower your payments) and/or work out some type of payment arrangements... Rather you pay the OC or a loan company, you still have to pay so you may as well make it good with the OC's....

If the Loan company DONT report to the CRA's then thats a different story, because then it will look on your credit report as if you paid off ALL of your outstanding debt AND have NO other dabts...

[Anonymous]

Taking out a personal loan to decrease CC debt will affect your scores in different ways.

First, you will have an inquiry - which may or may not ding your score depending on how many other inquiries you have.

If you get loan, you then have a "new" account reporting which could give you a small ding. A new account lowers your "average age of accounts" and depending on the amount of new credit you have, you could get have "too much new credit"

The scoring model takes into account installment utilizaton and revolving utilization.

The new loan will probably be an installment loan. If you have no other installments, this could help.

While you will be decreasing your revolving util, you will be increasing your installment util. Your revolving util counts for more than your installment util.

One of the most important things is.......will the loan be secured. I would never suggest transferring UNsecured debt(CC) to secured debt and is interest rate lower.

Another important thing........what are you going to do with those CC once you pay them off? If you charge them up again.....you now have the loan payment AND CC payment.

Message Edited by sidewinder on 04-18-2008 10:11 PM

[Anonymous]

I would say yes, get the loan and pay off the CCs...provided you have the discipline to not just charge up the CCs all over again.

FICO scoring would rather see you with low CC balances and an installment loan than no installment loan and high CC balances. Perhaps that is not logical, since the overall level of debt is the same, but that's how the game is played.

[haulingthescoreup]

I agree with TNWM.

For anyone reading this and considering it, you must be incredibly honest with yourself and very discliplined, or you will soon find yourself back with high CC balances AND a loan to pay off. I would put all cards in a sock drawer and carry one different bank card a month, using it only for gas and groceries, which you would have to pay cash for anyway. No clothes shopping, no vacation charges, no impulse charging, nothing.

While you're paying off your transferred credit card debt, that's the time to tear down old CC habits and build new ones. (Sorry, OP, this isn't aimed at you; this is just my usual caveat for anyone using a loan to pay off CC debt.)

[Macchamps75]

I only had 2k in CC debt i went and got a personal loan to pay it off. I now have a personal loan payment but i could see how people would go out and run up the CC's again after that. Once the CC's were paid i took the CC's and put them in my files to have if i need them but do not carry them or think about them till the loan is paid back.

[MattH]

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@Anonymous wrote:
I would say yes, get the loan and pay off the CCs...provided you have the discipline to not just charge up the CCs all over again.

FICO scoring would rather see you with low CC balances and an installment loan than no installment loan and high CC balances. Perhaps that is not logical, since the overall level of debt is the same, but that's how the game is played.

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The key phrase above is "provided you have the discipline." Personal-finance writers are pretty unanimous that debt consolidation loans can be a trap because they tempt the borrower into thinking progress has been made when progress has not been made.

[Anonymous]

If you are getting the payoff loan through a CU or bank and they are aware of the use, they may very well make you close the CC accounts on PIF. My DW consolidated CC's into an installment loan at her CU and they required closing. That could have serious implications on your Fico if they are old TL's.

[haulingthescoreup]

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@Anonymous wrote:
If you are getting the payoff loan through a CU or bank and they are aware of the use, they may very well make you close the CC accounts on PIF. My DW consolidated CC's into an installment loan at her CU and they required closing. That could have serious implications on your Fico if they are old TL's.

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Ouch! Good reason not to ask for a debt consolidation loan by that name! Or at least try to negotiate a deal, like allowing them to hold all but one card, or something.

I think that's a bit over the top on their part. It's as if they're a BK trustee or something.

[marty56]

It would not takle a loan out to pay off another loan unless I could pay it off in less then a year or it was at 0%.

I also agree with those who stated that you need to be honest with yourself to insure that you dont run up those credit cards again. As someone who had been in the world of maxed out credit cards, it was very difficult for me to break the cycle and I only did so after checking myself into a DMP, credit rehab if you will.

At the time, a quick fix loan would probably have landed me back into my old ways or worse.  The odds were not in my favour back then.

Message Edited by marty56 on 04-21-2008 05:18 AM