Hello,
In the midst of rebuilding credit after a disastrous few years. But my sons are in college and have earned the ability to go to great schools and I want them to have that opportunity.
We were in the midst of fixing our credit, which rockbottomed around 490 a couple of years ago. Was at 560 last year when my oldest was going off for his freshman year, and as such we couldn't get a student loan approval. So we paid his first year out of pocket, which was very hard but we managed it, all while staying current on bills and credit, though our utilization was frequently high.
We're now both around 610. All our credit cards are current, mortgage paid on time for 18 months now. Better, but obviously still more to do.
Now our middle son is ready to start college, which would mean two tuition bills.
Can now get approvals for personal loans, albeit at a high interest rate, that would wipe out credit card bills completely as well as let me pay off my two collection items, both of which say they'll delete the tradeline within 30 days. So it would provide a financial reset.
The credit score boost would theoretically also push us to where student loans would get approved, meaning we wouldn't have to pay the tuition out of pocket until after graduation. Not having to pay the tuition out of pocket this year would mean we could then pay off these new personal loans fairly quickly by paying extra on principal each month and then finally, after a long road back, be able to breathe.
Alternatively, it could set us up for a home equity loan approval (we are in that weird catch-22 where we have lots of equity in the home but have had poor credit so we couldn't get a loan to utilize the equity).
I'm just trying to figure out the best approach, not just for the short-term goal of my kids' education, but the long term. I feel like this plan works. But it's easy to feel something works and miss a different perspective. Just want to get it right!
