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Is a personal loan a good idea?

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Is a personal loan a good idea?

Hey everyone. 
 I'm new to posting in the forum, and I had a quick question. I've been rebuilding my credit from where my mom destroyed it (Phone bills and stuff in my name). Started out with Cap1 cards that never grew, and started paying off collections. I originally had 4, started paying two of them and three of them disappeared. One I still pay monthly to ERC for a T-Mobile account(balance is $2200 but it isn't being reported). The only other collection account being reported is an old medical bill for $400. 
Would it be a good idea for me to take out a personal loan to take care of the collection account and some credit card debt? Right now my utilization is at 27%, but because of a surgery I just had to put on one of my accounts it's going to go up to around 40-45%. 
I also don't receive sick leave at my current job so I'm putting living expenses on my Discover it card. 
Fico scores are Ex:691, Eq:632, Tu:675. I received a preapproved unsecured loan offer from OneMain for $5700 with 35% interest. 
My AAoA is only 1 year 5 months because I just the Discover Card I mentioned earlier around a month ago (6k SL). 
Would it be better to take out the personal loan, or just ride out the credit score dip and pay my balances back when I start back making money? 
Thanks everyone!

Message 1 of 10
9 REPLIES 9
Established Contributor

Re: Is a personal loan a good idea?

Your credit cards are probably somewhere around 25-30% interest so it does not make sense to take out a 35% loan for the same debt. You will end up paying thousands in interest either way but unless you cannot get by without it I would pass.

If you need to float some life expenses for a while try see what you prequalify for. (Try citi or Amex both will approve with so so scores) You didn't mention if you have any late payments. Try not to never miss a payment. Set up autopay. You can usually still get credit if your payment history looks good. 

BECU | Apple | Discover | Key
Message 2 of 10
Valued Contributor

Re: Is a personal loan a good idea?

No way on a 35% loan.

 

And if your Mom put those bills in your name before you were 18, you are not responsible and can get them all removed. My sister pulled the same crap with my nieces and nephews, and they all got them removed when they started seeking their own credit and had those negative marks against them.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
EQ/EX/TU: FICO 8's Sept 2019: 696/676/670, 25% utilization, INQ's: 0/0/1
New approvals based on this data: Costco Anywhere Visa $5500, NFCU Platinum $25k
Message 3 of 10
Member

Re: Is a personal loan a good idea?


@Morpho wrote:

Your credit cards are probably somewhere around 25-30% interest so it does not make sense to take out a 35% loan for the same debt. You will end up paying thousands in interest either way but unless you cannot get by without it I would pass.

If you need to float some life expenses for a while try see what you prequalify for. (Try citi or Amex both will approve with so so scores) You didn't mention if you have any late payments. Try not to never miss a payment. Set up autopay. You can usually still get credit if your payment history looks good. 


Yea, that's what I was thinking, but I figured asking wouldn't hurt. I don't have any late payments at all. Payment history says Exceptional. I was prequalified for the Citi DC Card last month but when I check it no longer pops up for me, so I was a little scared to apply. Also, most of my credit has been gained in the past 2 years, and 5 of my accounts are from Comenity bank. Being that I just opened the 2nd discover card, and my AAoA is so low, I was scared to try opening another card. On my Experian credit report it says that it looks like I'm "seeking" credit. I'm worried about getting shut down. 

Message 4 of 10
Member

Re: Is a personal loan a good idea?


@SteelerNYC wrote:

No way on a 35% loan.

 

And if your Mom put those bills in your name before you were 18, you are not responsible and can get them all removed. My sister pulled the same crap with my nieces and nephews, and they all got them removed when they started seeking their own credit and had those negative marks against them.


Unfortunately I was just a dumb YA. I let her put them in my name when I was 19-20 because her credit was already ruined. She's also disabled now, and can't pay any of it back. Originally there was a balance to three different companies, each ranging from 1800-2500, but 2 disappeared and I've been paying on the most expensive (T-Mobile) because I was a smarta** and asked them to send me proof of the debt, which they did. It doesn't seem to be reporting as long as I'm paying towards it. 

Message 5 of 10
Super Contributor

Re: Is a personal loan a good idea?


@jhollow509 wrote:

Hey everyone. 
 I'm new to posting in the forum, and I had a quick question. I've been rebuilding my credit from where my mom destroyed it (Phone bills and stuff in my name). Started out with Cap1 cards that never grew, and started paying off collections. I originally had 4, started paying two of them and three of them disappeared. One I still pay monthly to ERC for a T-Mobile account(balance is $2200 but it isn't being reported). The only other collection account being reported is an old medical bill for $400. 
Would it be a good idea for me to take out a personal loan to take care of the collection account and some credit card debt? Right now my utilization is at 27%, but because of a surgery I just had to put on one of my accounts it's going to go up to around 40-45%. 
I also don't receive sick leave at my current job so I'm putting living expenses on my Discover it card. 
Fico scores are Ex:691, Eq:632, Tu:675. I received a preapproved unsecured loan offer from OneMain for $5700 with 35% interest. 
My AAoA is only 1 year 5 months because I just the Discover Card I mentioned earlier around a month ago (6k SL). 
Would it be better to take out the personal loan, or just ride out the credit score dip and pay my balances back when I start back making money? 
Thanks everyone!


Just ride it out and pay the balances back.

 

Certainly no crazy bad loans like the one you mentioned. If you could get a low interest loan from a credit union, then maybe, but bad loans will just get you in deeper, and with the wrong sort of people.


Total revolving limits 720500 (594000 reporting) 10/2/19 FICO 8 scores: EQ 744 TU 782 EX 746
Message 6 of 10
Established Contributor

Re: Is a personal loan a good idea?

I agree with the other posters, a loan with a 35% interest rate is a TERRIBLE idea.
Put the amount of what would be the payment for that horrible loan into a savings account until you get enough to settle/pay the collections
Scores hover around 800
Haven't been AZEO in over a year
Rome was not built in a day, neither is a good credit profile
Message 7 of 10
Senior Contributor

Re: Is a personal loan a good idea?

Where did you get that offer from OneMain? A mailer, or do you have a Credit Karma account? My Credit karma account seems to think I'm in desperate need of a personal loan as I carry several thousand in CC debt, 9% utilization. But it's all 0% in monthly pay in full usage and intro or balance transfer 0% and I have the funds to pay it all so I definitely do not want or need a personal loan.

 

But I occasionally look at them when I'm bored. I have offers from Lending Club & Prosper for around 12-13%, and way down the list is a OneMain "pre-approval" - for 35%! So my suggestion is OneMain is the last place you want to get a loan from. Look around elsewhere.


Fico 08: 734/716/734 TU/EX/EQ
Message 8 of 10
Member

Re: Is a personal loan a good idea?

Yep! It’s my credit karma account. It loves to recommend personal loans and CreditOne cards.
Message 9 of 10
Frequent Contributor

Re: Is a personal loan a good idea?

SoFi has a prequal personal loan option (softpull) would only do it if the interest savings are worth it. 

https://www.sofi.com/share/2695078

Message 10 of 10
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