Need Advice on how to proceed

[DSTforlife]

I hope everyone is having a great week!  I need some advice on what to do and not to do.  Here's some background:

1) I just completed a HELOC to do some home renovations.

2) I plan to get a vehicle in the next month or two

Over the past month, I've been on the myfico forum and have been paying more attention to my own credit report.  Now, i'm thinking I may benefit from getting a personal loan and consolidating my credit cards.  I have about 15k in cc debt...none of my cards are maxed out, but i've been carrying a balance for a while now.  I did a prequal for a personal loan at 6.99%.  The interest rate is lower than my credit card rates, and the loan payment will be about $215 cheaper than to total of my credit card payment.

Considering the HELOC and a near future car purchase, do you think I should get the personal loan?  Will this spook the credit card companies?  If I did pull the trigger on the loan, this is what will be on my credit report as active once the dust settles:

HELOC

Personal Loan

Auto Loan

Mortgage

1 credit card with a small balance

10 credit cards with zero balance

I'm wanting to keep the HELOC strictly for home improvements/repairs.  I do not want to use for credit card reduction.  My FICO 8 scores are 741, 742, 738.  Should I pull the trigger before the car, after the car, or not at all?

Thanks in advance for all of your insights/advice.

[lns1976]

I really don't think it would cause you a problem but I would consider doing it 6 months before the car purchase if you can.

This would show a 6 month period with the lower DTI and could possibly (someone else would know better) get you better rates.

Low DTI and Low Utilization are key points to getting good rates on loans.

[Citylights18]

The personal loan will lower your revolving credit utilization and with the rising rate environment it might make sense to try it now and lock it in rather than contiue on with the variable credit card rates.

Car manufactures have their own set of interest rates they utilize. If you signed up for a myFICO account you would recognize this. They tend to run higher than mortgage scores.  For example my lowest mortgage score is 750 and lowest auto loan score is 792.

I believe you would be fine if you waited 61 days until after the personal loan for your scores to catch up to loan consolidation. Enough time to get the loan, pay the creditors and have it all reflect. Additional time will make your numbers look even better but most of the near term boost on utilization will come from that payout.

Another possiblity instead of getting a loan is to try and take out a 0% APR credit card, boosting your total revolving credit and lowering the percentage of utilized credit as well as helping with the rate of the debt. 15k really isn't that much in the way of credit card debt.

[DSTforlife]

Thank you both for the advice. I actually considered looking for a 0% card, but I’m not sure I want to waste a hard pull if I don’t get the amount I need. Then again, putting some of my balances on 0% is better than nothing. I believe I’m overthinking this. I haven’t applied for anything in years besides mortgage refi and HELOC….and I think the fear of applying for something is factoring into my indecision. Ughhh….

[lns1976]

@DSTforlife Are you a member of a CU like NFCU?  They typical have loan officers you can talk to before applying going over what kind of rates you would get and what might benefit your rates if you wait. 

[DSTforlife]

Yes, I'm a member of a few credit unions.  I haven't spoken to a loan officer about a personal loan.  I did speak to one about car loan and rates.  I know which credit union I will use for the car loan because the rates are pretty good.  however, their personal loan rates are higher.

i will eventually make a decision.  however, do you think getting the personal loan before the car loan is worth it?  do you think it will kill my scores to the point of not getting the best car rate?  the credit union pulls Equifax only, but i'm not sure which version (the loan officer didn't know).  do you think it will spook the credit card companies if i get a HELOC, personal loan, and car loan in a 6 month time frame?

right now, my auto 8 is 730's -750, auto 9 770's across the board, and FICO 9 are also 770's across the board.

[Junejer]

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@DSTforlife wrote:

Yes, I'm a member of a few credit unions.  I haven't spoken to a loan officer about a personal loan.  I did speak to one about car loan and rates.  I know which credit union I will use for the car loan because the rates are pretty good.  however, their personal loan rates are higher.

i will eventually make a decision.  however, do you think getting the personal loan before the car loan is worth it?  do you think it will kill my scores to the point of not getting the best car rate?  the credit union pulls Equifax only, but i'm not sure which version (the loan officer didn't know).  do you think it will spook the credit card companies if i get a HELOC, personal loan, and car loan in a 6 month time frame?

right now, my auto 8 is 730's -750, auto 9 770's across the board, and FICO 9 are also 770's across the board.

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Hi @DSTforlife, as others have said, getting the consolidation loan now will help your credit util % (just be sure not to run the balances up again before paying off the consolidation loan) thus raising your FICO scores. I would allow all of the credit cards to report the updated balances before pulling the trigger on the car loan.

I understand your apprehension, believe me. I was never a real credit seeker, so everytime I app'd for something, I got sweaty palms and a bit of a heart race. Even with my current profile, I hold my breath a bit before hitting submit on an app (years of conditioning there. ). I believe you will be fine if you wait a couple of months after paying everything down before apping for the new car.

GL

[DSTforlife]

Thank you for your response. 

I am always so fearful of pulling my credit for anything.  I was even scared when I did my refi last year...not sure why.  I haven't increased my credit card balances in years..so my risk of running up cards is very low.  i've just been paying down the balances by paying more than minimum due.  It wasn't until recently that I took a hard look at my credit report and realized that I should make my scores work for me and take advantage of lower personal loan interest rates (and be done with this cc debt all together). 

it was always my plan to get another car and HELOC this year. Adding an unplanned loan in the mix is giving heartburn.