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Need help with consolidation loan

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Need help with consolidation loan

I'm new to consolidation loan. I owe 19k of credit cards. My credit score is 699. I'm never late on a payment. My monthly entire credit card bill is nearly $500. I like to get it to my lower.

Well, I'm thinking about applying for a consolidate loan but not sure how it works in every angle. The questions i have are:

In these consolidation loan companies, will all my credit card accounts be closed/frozen during making payments to the loan?

What is a good common interest rate for a consolidate loan? or perhaps on the amount i currently owe?

Is all lender company the same thing? And when applying, does the inquiry hit my credit report hard? Because if it doesn't impact my credit report, then i like to apply for a few to compare what they have to offer me as far as interest rates and payment duration.

Let me know if you guys can help me out. Thanks.
Message 1 of 9
8 REPLIES 8
Established Contributor

Re: Need help with consolidation loan

HI Johnlee2018,

 

Usually the people that need them do not qualify for them. Generally places won't offer loans if your utilization percentage is too high.  What is credit limit for all of your credit cards? 

 

additionally  your debt to income ratio might cause issues for companies. The higher your debt to income ratio, the more likely companies will require you to close credit lines, or decline to lend to you.

 

 

Message 2 of 9
New Member

Re: Need help with consolidation loan

kree,

card #1 i owe $10k
card #2 i owe $5k
card #3 i owe $1k
card #4 i owe $1k
card #5 i owe $500
card #6 i owe $500
card #7 i do not owe. its active & paid off: $15k

i been receiving pre approval debt consolidation offers in the mail and im not sure if they are honest. i dont plan to close any of my accounts though.
Message 3 of 9
Established Contributor

Re: Need help with consolidation loan


@johnlee2018wrote:
kree,

card #1 i owe $10k
card #2 i owe $5k
card #3 i owe $1k
card #4 i owe $1k
card #5 i owe $500
card #6 i owe $500
card #7 i do not owe. its active & paid off: $15k

i been receiving pre approval debt consolidation offers in the mail and im not sure if they are honest. i dont plan to close any of my accounts though.

When you say "card #1 i owe $10k, do you mean that the card is maxed out?   Because 10k out of 10k is not as good for you as 10k out of 15k or 20k. 

 

Also, what type of card is card #7?   You could potentially do a "balance transfer'  onto that card. Several companies offer 0% or 3% balance transfers for 9-18 months.  This would be lower than a consolidation loan.

 

 

Message 4 of 9
New Member

Re: Need help with consolidation loan

kree,

sorry. all cards maxed out except for card #7

yea i thought about the transferring option on card #7. do you think i still qualify for a debt consolidation loan in my current situation?
Message 5 of 9
Established Contributor

Re: Need help with consolidation loan

Your total utilization is over 50%.  and several cards individual utilization is maxed out.

 

I think to qualify for a consolidation loan you would likely need to get your total utilization under 48.9% and your individual utlizations under 88.9%  (assuming your debt to income ratio is acceptable)

 

But I could be wrong. Several lenders will offer pre-approval with a Soft Pull.  So if they look and say "no" there is no harm to your profile.  Definitely better to check with the lenders than with me.

Message 6 of 9
Valued Contributor

Re: Need help with consolidation loan

Hello,

A consolidation loan can be great if you have the discipline not to run up the cards again.

If you currently do not use a budget program, I would recommend that you check out Dave Ramsey or YNAB (my personal preference) to get a better idea of where the money is going.

 

Check out Lending Club and SoFi.com (there are also others) and do a Soft Pull pre-qualification. This will give you an idea if you will qualify.

 

Finally, I would say don't close your credit cards when you pay them off. At least not all of them as this would not be good for your credit score. Having some active lines are important for maintaining your score.

 

Good luck

Message 7 of 9
Valued Contributor

Re: Need help with consolidation loan

you may want to go to CreditKarma and see if you qualify for any loans with reasonable rates; having maxed out credit cards will make finding a reasonable rate difficult.   You may not be able to get a O% BT rate on the #7 card but if you are able to consolidate the majority of your debt to a 0% BT then this is your best bet at least for a while.   After a few months of having  most of your debt on a  0% card you may have a better chance of getting reasonable rates. 

Message 8 of 9
Regular Contributor

Re: Need help with consolidation loan


@johnlee2018wrote:
I'm new to consolidation loan. I owe 19k of credit cards. My credit score is 699. I'm never late on a payment. My monthly entire credit card bill is nearly $500. I like to get it to my lower.

Well, I'm thinking about applying for a consolidate loan but not sure how it works in every angle. The questions i have are:

In these consolidation loan companies, will all my credit card accounts be closed/frozen during making payments to the loan?

What is a good common interest rate for a consolidate loan? or perhaps on the amount i currently owe?

Is all lender company the same thing? And when applying, does the inquiry hit my credit report hard? Because if it doesn't impact my credit report, then i like to apply for a few to compare what they have to offer me as far as interest rates and payment duration.

Let me know if you guys can help me out. Thanks.

Your credit score is good enough to get a consolidation loan. Some take people with 640+ FICO 8, others 680+, and some 700+.  The factors beyond credit score are how much do you make in a year? If you make enough it’s posible to get one for 20k with your score. But your DTI (debt to income) ratio needs to be under 36% to 43% for most of these loaners.  It’s good to get if the interest rates are lower than your credit card rates. But if you get one you need to not use the cards anymore except for charges you would have anyways and can PIF every month. No your cards don’t close down. You just get the money in your account and Pay all the balances off with it. You can soft pull what your rates will be for most online companies. They will tell you if so it’s a soft check to see your rates. They give you your APR and term length thru the soft pull. When you actually apply when you see a rate you like, then you get a hard pull from one to three of the CRAs. If you go to a traditional bank for a loan it’s often hard pull just to see tho. You would see a huge increase in score paying off your credit cards with the loan. I think I covered most the basics.



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Message 9 of 9
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