Educate me on debt consolidation loans

[steelholder]

Hey all,

I'm looking into getting info on these types of loans and have a few questions. First, a bit of background, I have about 7 open CC that total around 20k of revolving debt. I don't have any loans or negatives on my credit reports and want to consolidate all payments and reduce the amount of interest I am paying. 

Question 1 - Do I have to wipe out/close the entire balance on each card I choose to consolidate? I'd like to keep a 3-5% utilization on each.

Question 2 - If I have a limit of 10k on a card and pay off 5k does the cc company reduce my credit limit in any way?

Question 3 - how will my overall credit limit be affected? For example, if my spending power is 100k and I get a 15k loan will it be reduced to 85k?

Question 4 - are there any reputable agencies that offer these types of loans specifically? Which rate is considered a "good deal"? I have navyfed and alliance credit union any tips?

Thank you all for your help!

[dragontears]

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@steelholder wrote:

Hey all,

I'm looking into getting info on these types of loans and have a few questions. First, a bit of background, I have about 7 open CC that total around 20k of revolving debt. I don't have any loans or negatives on my credit reports and want to consolidate all payments and reduce the amount of interest I am paying. 

Question 1 - Do I have to wipe out/close the entire balance on each card I choose to consolidate? I'd like to keep a 3-5% utilization on each.

Question 2 - If I have a limit of 10k on a card and pay off 5k does the cc company reduce my credit limit in any way?

Question 3 - how will my overall credit limit be affected? For example, if my spending power is 100k and I get a 15k loan will it be reduced to 85k?

Question 4 - are there any reputable agencies that offer these types of loans specifically? Which rate is considered a "good deal"? I have navyfed and alliance credit union any tips?

Thank you all for your help!

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Q1: you can leave whatever you want as a balance but I don't know why you would do that, especially if you are currently being charged interest 

Q2: depends on how much of a risk lenders think you are and what the risk tolerance of the lender is. YMMV situation 

Q3: I don't understand what you mean by "buying power"

Q4: credit unions can be a great place to start 

[steelholder]

Thank you. Keeping a small balance is beneficial, if my balances were 0 then I would be risking the CC company closing my account.

[dragontears]

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@steelholder wrote:

Thank you. Keeping a small balance is beneficial, if my balances were 0 then I would be risking the CC company closing my account.

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Ummm lenders don't close cards whenever the balance reaches 0, it takes months of non-use before they will be closed for that reason. But if you want to pay interest for a little longer that is your choice. 

[steelholder]

Ummm yeah they do, I speak from experience not just making things up.

[dragontears]

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@steelholder wrote:

Ummm yeah they do, I speak from experience not just making things up.

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If you say so.

I must have different lenders than you as I pay my cards to $0 every month and none has canceled my cards.... 

[donkort]

I could NEVER get approved for a debt consolidation loan----even though my scores were in the upper 600s.  I just had too much debt!  What a paradox!

[steelholder]

Another question, if I do get a loan how long would it stay on my credit report AFTER I pay it off?

[donkort]

I believe for quite a while.  It would be beneficial if you pay it on time every month.  You would be screwed for least a couple of years after a missed payment---if you missed even one payment.  

I have items that have been closed for more than 10 years still on my credit report.  And they count in my "average age of accounts."  

[steelholder]

I think you're confused with what I asked, my question is how long does a loan stay in your credit report after you pay it off? Is it similar to a bankruptcy or repo?