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Need advice on debt refinancing options

Established Member

Need advice on debt refinancing options


Message 1 of 8
Valued Contributor

Re: Need advice on debt refinancing options

WIth a 650 score and very high utilization I doubt you will find a personal loan that will help you.  Paying dwon some of the CC debt will help your scores slightly but 10k won't be enough to do much really.  I had utilization at 76% late last year and my scores didn't really move much until I brought my utlization under 50%.  I suspect your options are to simply pay off the highest interest cards first, your minimum payments are pretty huge so it will be tough to make progress.  Of course if you could get a zero percent balance transfer offer that would help but I don't think that is likely and having more HP's combined with the ultization will likely hurt you more.  You may have to make the tough business decision to file bankruptcy, it would be a tough thing to go through but it is likely the only way you will get free of this debt short of increasing your income and then payments substantially.  There are debt management options also but from what I can tell filing bankrupctcy is probably a better option.

Message 2 of 8
Established Member

Re: Need advice on debt refinancing options

Thank you for the input.

I am making substantially more and more money every few months as the business grows so my plan is to pay it all off over the next two years. I don't want a bankruptcy on my record.

Let's assume I can get utilization down to 50% in a year, what might be the best next steps from there to eliminate the rest as quickly as possible?
Message 3 of 8
Valued Member

Re: Need advice on debt refinancing options

Your best bet would be to pay down to 50 or less percent. Even then it will be extremely hard to find a lender to consolidate. You could go the NFCU route and either apply for a CC or a CLOC and consolidate it that way. They may even be open to offering you a consolidation loan.


All of that will only happen when you pay down the debt. I literally went thru the exact same situation a few months back, everybody said no.


My profile at the time was:


Income: 254,000

UTIL: 87%

Credit Score Mid 600s

0 negs, perfect profile


Everybody said no, even when I showed them I was paying over 6k a month towards my cards month after month. Makes no sense, I obviously had the money to pay it, and I was, they still didn't care.


Good luck, focus on paying it down, I've since paid mine down to less than 20% in the last 45 days. Over 50K paid, only now are the lenders opening up to me.

MY CC Pics are too big now - lol.
Message 4 of 8
Established Member

Re: Need advice on debt refinancing options

@lexguru do they all look at your income before or after taxes?

If you are an employee of a company I guess it doesn't matter, but I'm self employed and wondering if they will look at net profit or gross profit?

Thanks for sharing your story, that's incredibly helpful!
Message 5 of 8
Super Contributor

Re: Need advice on debt refinancing options

@want2bedebtfree wrote:
I am hoping someone can contribute some creative ideas to help me with my situation. Here goes.

I made the mistake of starting two businesses and using personal credit to pay for business startup expenses rather than opening lines of business credit. Lesson learned.

One of my businesses has been since closed down and the other took off and is doing extremely well.  

I now have about 64k in credit card debt and I am trying to get creative in figuring out a way to pay off everything faster.

I have 64k in credit card debt across a few credit cards, with an average interest rate of 22%. Here are all of the details of my situation:

650 credit score
94% credit card utilization ratio
No other debt
Never missed a payment
No derogatory marks on my credit
Average age of credit history about 4 years
Minimum payments every month equal about $3,400
I have minimized all spending as much as humanly possible and am on an extremely tight budget
(Last Year) $140k in gross revenue (sole prop) and $57k in net income last year after all expenses and deductions
(This Year) On track for easily over $200-250k in gross revenue (sole prop) and ??? in net income 

I have enough monthly income right now to pay all of my living expenses and bills, plus the minimum monthly payments on my debts, but not much left each month. I am making more and more money every month because my business is doing very well but I want to pay everything off as quickly as possible. 

I am about to pay $10k off of the highest interest rate accounts, which should drop my utilization down to about 80% and my total credit card debt to about $54k.

I am debating on next steps. With a credit score of approximately 650 and a credit card utilization ratio so high, I cannot get a personal loan with a decent interest rate.

I am wondering if I were to take a $20k personal loan with a relatively high interest rate of 15-20% or higher, is it worth it because it makes my credit card utilization ratio drop a lot right away? Will I see a decent enough rise in my credit score after paying down the additional $10k as well as moving some credit card debt to a personal loan that I will be able to get another loan at a lower rate within a couple of months?

I figure if I take a higher rate on the first loan, wait a few months for the credit to jump up and then apply for a second I can hopefully get a much better rate on the second.

Does anyone have any creative ideas about how to consolidate and refinance all of this given my scenario?  Also any suggestions on which personal loans to apply for?
Thank you!!!!

I would advise you to avoid the debt consolidation trap and instead apply the snowball method to paying off your cards:


1. stop using the cards

2. pay minimum + $5 each month towards all accounts except the one with the smallest balance, and concentrate all additional money on paying off the account with the smallest balance

3. after that account is paid off, move on to the next smallest

4. and so on

Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 6 of 8
Valued Contributor

Re: Need advice on debt refinancing options

The debt is across a few cards. At this point use the avalance method and pay down the highest interest rate first.


And, I would actually pay each card to below 90%. Next target is to pay all cards to below 70% starting with the highest interest rates.


Again, all cards down to below 50%. At that point scores will improve and you can concentrate on one card at a time.


Sounds like a nightmare to mix personal credit cards with business expenses. 

Message 7 of 8
Regular Contributor

Re: Need advice on debt refinancing options

Do you have loving family members? Borrow money from them and pay them back with a smaller interest rate (3-7%) 


I honestly would cut all types of spending. 22% on over 60k is scary. Especially on credit cards... ouch. 

Start thinking about just the necessity. Water, food and shelter. Anything and everything else is just extra crap you absolutely do not need right now. 


Pay off as much as you can. Pay your debt off first before spending that money and anything left over, PAY IT TO THE DEBT. 


If the banks will not lend you a loan to consolidate this then start selling your assets. Really, look at what you have and anything you don't use- SELL IT AND SELL IT FAST. Do you need your couch? No. Sell that now. Cut your utilities and food bills. You will be living with no electricity unless you need it and only by candlelight. Forget cable and internet. If you need it, head to the library. Sell your car. Take the bus, or bike, etc. You really want to slim down dramatically in order to get rid of this debt. 

Message 8 of 8
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