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Is Consolidation the Answer?

New Visitor

Is Consolidation the Answer?

I have 10700 in credit card debt. My credit card utilization is at 80%. I have no derragatory marks on my credit score. The reason I am considering consolidating is because I am planning on opening a business which requires a down payment for a business loan, which is why I would like to shovel the majority of my income into savings instead of credit cards. I have done those score simulators that say my score will drastically go up if I pay off my credit card, curious if consolidating would have the same affect. Any insight would be much appreciated.
Message 1 of 6
5 REPLIES
Super Contributor

Re: Is Consolidation the Answer?

With debt consolidation loans, you usually get just more than the balance you want to cover. So you would still see fairly high utilization on that loan. Overall utilization percentage may drop, which can help scores some.

Can you list out the cards you have, CL on each, the balance on the card, and current interest rate. If a promo rate, when does that expire, and what does the rare go to? With $10k, it may be best to pay down, shuffle some balances if possible.
High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not. [unless a 100k points SPG Luxury Upgrade appears... well lookie here...]
Message 2 of 6
Valued Contributor

Re: Is Consolidation the Answer?

Welcome Op1. NRB525 has it correct about how this could play out. But once you list more info, folks can give you a more direct opinion on what would be helpful to you. At first glance, I think a consolidating loan might be a good idea for you, but that is without knowing more of the details.
                                 

Total Credit: $218,900Credit Utilization: 1%AAoA: 5 years, 5 monthsInstallments: Car Lease, Marcus LoanNegatives: 0


                                                                                              
                      DSC-27.1K | NFC-25K | ALI-25k | WAL-10k | BoA-22k | BB-12k | NFL-15k | LOW-35k | AMX-19.3k | CHA-10k | PF-8.8k | C-DC-9.7k
Message 3 of 6
Valued Member

Re: Is Consolidation the Answer?

How much of a credit score decrease will you see if someone takes out a personal loan to consolidate the credit card debt. I just took out a loan paid off all my cards without thinking how much the loan will affect my credit score
Message 4 of 6
New Visitor

Re: Is Consolidation the Answer?

I have $10,757.94 on a cc with a max of 12,500. 0 on another card with a max of 1,100. And 0 on another one with a max of $700. Interest rate on the cc with a balance is 18%. The interest rate on the consolidation was around 24. The reason I am considering is to raise my credit score while allowing myself to save up more money.
Message 5 of 6
Frequent Contributor

Re: Is Consolidation the Answer?


@CreditNovice1 wrote:
I have $10,757.94 on a cc with a max of 12,500. 0 on another card with a max of 1,100. And 0 on another one with a max of $700. Interest rate on the cc with a balance is 18%. The interest rate on the consolidation was around 24. The reason I am considering is to raise my credit score while allowing myself to save up more money.

18% vs 24% doesn't sound like a good deal. You may see a small boost in score, but you'll still have a balance that you will pay more in interest on. Basically spending money on a few score points. Personally, I wouldn't do it, considering your card has the lower interest rate.

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