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which to pay off, CC or Personal Loan

Leper-Messiah
New Visitor

which to pay off, CC or Personal Loan

Wondering if this has been asked before. Is it better to pay off a personal loan or reduce balance on a CC?

 

Currently, I have 2 personal loans and CC unitlization at 50%

 

Im hoping to boost my score so i can get a personal loan for consolodiation and lower APR

 

Thoughts?

6 REPLIES 6
BrutalBodyShots
Super Contributor

Re: which to pay off, CC or Personal Loan

CC, no questions asked.

 

Revolving debt is much more important (score-impacting) than installment debt.  Even outside of scoring, 9 times out of 10 one will pay more interest on revolving debt than they will on installment debt, so from a financial perspective getting rid of revolving debt usually makes the most sense as well.

 

50% overall revolving utilization is costing you significant Fico points.

 

Going from 100% aggregate revolving utilization down to ideal (1%) could be good for 70-100 Fico points depending on scoring model.

 

Going from 100% aggregate installment loan utilization down to ideal (1%) maybe be good for 25 points or so just for comparison purposes, with the bulk of those 25 points coming from the crossing of the 10% threshold resulting in loans being "significantly paid down." 

Message 2 of 7
SouthJamaica
Super Contributor

Re: which to pay off, CC or Personal Loan


@Leper-Messiah wrote:

Wondering if this has been asked before. Is it better to pay off a personal loan or reduce balance on a CC?

 

Currently, I have 2 personal loans and CC unitlization at 50%

 

Im hoping to boost my score so i can get a personal loan for consolodiation and lower APR

 

Thoughts?


As @BrutalBodyShots correctly observes, your best bet is to concentrate on the revolvers.


Total revolving limits 653000 (575000 reporting) FICO 8: EQ 716 TU 747 EX 715

Message 3 of 7
Mr_Mojo_Risin
Valued Contributor

Re: which to pay off, CC or Personal Loan

BBS already took care of you here but I wanted to say I dig your handle. 

I assume it's a nod to Metallica? 

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Message 4 of 7
Leper-Messiah
New Visitor

Re: which to pay off, CC or Personal Loan

It is, Metallica is the best Smiley Very Happy 

Message 5 of 7
Mr_Mojo_Risin
Valued Contributor

Re: which to pay off, CC or Personal Loan


@Leper-Messiah wrote:

It is, Metallica is the best Smiley Very Happy 


Right on to that! 

The kings of metal 🤘

NFCU More Rewards 24K CL
AODFCU Visa Signature 5K CL
NFCU Cash Rewards 4K CL
Discover IT 1.5K CL
Cap1 Quicksilver 600 CL
NFCU auto loan
Message 6 of 7
JakeRogue
Valued Member

Re: which to pay off, CC or Personal Loan

As others have said, CC first. The interest on the CC will hurt your more in the long run than the interst on a personal loan and your credit score is more impacted by the credit card debt than personal loan debt.

 

Cheers!



FICO 8 March 2021 - EQ: 806 EX: 791 TU: 800
Message 7 of 7
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