Hey everyone!
Reading thru you guy's experiences has been a big help to me over the last year, as I've worked to rebuild from my mistakes of the past. And, because I really do *not* want to make another mistake, I want to ask for your advice! First, I'll run down the situation:
Current Scorewatch: 662 (up from 592 in May 2014).
Current Open Accounts (current balance/limit):
Cap1 Quicksilver - 3700/5000
Cap1 Platinum - 820/1500
FNB Omaha - 1980/2750
Amazon Storecard - 1075/1800
WalMart Storecard - 970/1500
Conoco gas card - 38/400
Lane Bryant storecard - 89/550
PayPal Credit - 89/750
(All these accounts are at around 24% interest)
Other:
Student Loans - 6100 @ 6.625%
IRS Tax Debt - 24K (Currently making $400 monthly payments toward this - does not show on any credit report, thank god)
Credit Report Baddies:
Old Cortrust Bank credit card charged off, 2 collection agency entries marked paid, all set to drop off by the end of the year. Old tradeline for student loans still present (even tho I've undergone rehabilitation on them) that falls off in 2017. Last 5 years 100% clean, no lates, no nothing.
Income: 70K/year
I'm considering applying for a 10K prosper loan to consolidate down all those cards. In the month of August, I paid over 1300 as payments toward those credit card accounts. Prosper has quoted me 10K over 36 months at 22% APR with a monthly payment of 350. The way I figure it, this would give me an extra 1K each month I could put toward the tax debt or the student loans. The way I figure it, this would massively improve my UTI, and result in a pretty good boost to my already improved scores, plus with the baddies coming off by the end of the year, I could probably crack the 700 club for the first time in my life!
The only pitfall I can really see with this right now is if I can't maintain my willpower, and end up running up the cards again. I don't forsee that happening, tho - I've been working too hard the last year to allow that to happen. I will probably put as many of my current monthly payments as I can onto the Quicksilver for the cash back rewards, and just pay off it's balance in full every month - stop using the others entirely, but keep them open - maybe once my scores get higher try to get my interest rates lowered.
Does anyone see any issues with this plan that i'm not thinking about? Or do you think I should go for it?
Well you hit the obvious pitfall (that you'll run up cards again; however, if you're paying them down now, that seems unlikely to me but I don't know you). Doesn't sound like that 1300/month is just minimum payments though? As a result that excess doesn't all drop to free cash flow as you still have expenses, think your math is a little off 
I don't know that a 2% win in APR is really worthwhile TBH, especially with the following:
1) You can pretty up your balances even with your current utilization some
2) You have several old derogs falling off end of the year.
I'd put lipstick on the pig for a couple of months by snowballing the low balances, until those derogs fell off; after that make friends with a local CU or two and see what they can do for you and then talk to Lending Club and Prosper. I think you can do better APR wise than 22% by that point, possibly by a lot depending on score improvement in the next few months, and this would absolutely make a lot more sense if there was more disparity between the APR's.
@Revelate wrote:Well you hit the obvious pitfall (that you'll run up cards again; however, if you're paying them down now, that seems unlikely to me but I don't know you). Doesn't sound like that 1300/month is just minimum payments though? As a result that excess doesn't all drop to free cash flow as you still have expenses, think your math is a little off
I don't know that a 2% win in APR is really worthwhile TBH, especially with the following:
1) You can pretty up your balances even with your current utilization some
2) You have several old derogs falling off end of the year.
I'd put lipstick on the pig for a couple of months by snowballing the low balances, until those derogs fell off; after that make friends with a local CU or two and see what they can do for you and then talk to Lending Club and Prosper. I think you can do better APR wise than 22% by that point, possibly by a lot depending on score improvement in the next few months, and this would absolutely make a lot more sense if there was more disparity between the APR's.
I think this is very solid advice.
@Anonymous wrote:You listed all your debt but did not mention an auto loan. If you have a car with no loan, consider financing it for it's value and use the funds for your credit card consolidation.
That's a good idea too.
