@spedteacher1 wrote:I have about 8 payments left on a personal loan (it was 5 years). I need to take out another personal loan for some other expenses. Should I wait until I have finished the first personal loan? I can pay more each month and be finished with it in about 4 months. I think my credit score is going to drop once I pay it off, right? So I am not sure what the best timing is as to when I should apply and get the new loan. Any advice?
We would need much more information about (a) what your priorities are and (b) what your credit profile is like in terms of loans, revolvers, limits, balances, and original loan amounts.
@spedteacher1 wrote:Hopefully I know all the answers.
The original loan was 25k, I have 4K left.
My only other loan is my house. Just refinanced. Original loan was 370k, I am at 350k. House is worth 800k now.
Our credit scores are between 710-720 on experian.
I need the loan to pay for some credit card debt and lower the interest rate. We are about 50% of utilization.
When I log into AMEX I have an AMEX preapproval for 40K, but I am afraid to pull the trigger and be denied.
1. Yes you should pay off the existing loan first, but the money would be better spent paying down your revolving debt before that.
2. Having your revolving utilization at 50% is suppressing your scores and is therefore going to force a higher interest rate on the personal loan.
3. If I were going to go for a personal loan like that I would be looking at credit unions, but to each his own.
4. No I don't think that in your case paying off the existing loan will hurt your scores. It might even increase them a little.
@spedteacher1 wrote:Thanks. I am planning on using the loan to help me consolidate the credit card debt. I won't be using AMEX for loan, I will use USAA. I won't do anything until I have finished the original personal loan. And in the meantime, I will keep paying down the credit card debt to hopefully lower my uti. I am working really hard to do it!
Great. Keep up the good work.