Hi all,
I'm fairly new to the forum, so first I wanted to say thanks in advance for your help... and go easy on me! 
I have about 20k in credit card debt... 5 cards total (2 with Chase, 2 with Capital One, and one with Mercury), all basically maxed out. I am paying them on time every month, but only the minimum payments because there isn't anything "extra" in my budget that allows me to pay more. Of course, my credit score has taken a hit because of the high usage (last I checked, it was 602... ugh!).
I'm trying to decide if getting a debt consolidation loan will help. My plan would be to get the loan through someone like UpStart (they come to mind because they're always sending me stuff in the mail), pay off the cards and have a lower monthly payment. The problem with my budget is that I spend so much per month on credit card payments that I don't have anything extra to put in savings for things like car repairs, emergencies, etc... so if anything like that comes up, I have to go to whatever credit card has money available on it. I would rather pay cash for everything and use my card(s) for emergencies or for whatever "extra" thing that might come up that I don't have cash for.
My questions:
1. Would my credit score go up if I paid off the cards, but do it by incurring another debt?? (I also have 60k in student loans and a car payment)
2. Do you have suggestions for a good debt consolidation loan company to go through? I plan to go talk to my credit union, but thought I'd ask you guys for other options/suggestions.
3. Am I on the right track?? If this is not a good plan, could you make some suggestions for me?
Thanks so much for your insight!!
Shawn
@Anonymous wrote:Hi all,
I'm fairly new to the forum, so first I wanted to say thanks in advance for your help... and go easy on me!
I have about 20k in credit card debt... 5 cards total (2 with Chase, 2 with Capital One, and one with Mercury), all basically maxed out. I am paying them on time every month, but only the minimum payments because there isn't anything "extra" in my budget that allows me to pay more. Of course, my credit score has taken a hit because of the high usage (last I checked, it was 602... ugh!).
I'm trying to decide if getting a debt consolidation loan will help. My plan would be to get the loan through someone like UpStart (they come to mind because they're always sending me stuff in the mail), pay off the cards and have a lower monthly payment. The problem with my budget is that I spend so much per month on credit card payments that I don't have anything extra to put in savings for things like car repairs, emergencies, etc... so if anything like that comes up, I have to go to whatever credit card has money available on it. I would rather pay cash for everything and use my card(s) for emergencies or for whatever "extra" thing that might come up that I don't have cash for.
My questions:
1. Would my credit score go up if I paid off the cards, but do it by incurring another debt?? (I also have 60k in student loans and a car payment)
2. Do you have suggestions for a good debt consolidation loan company to go through? I plan to go talk to my credit union, but thought I'd ask you guys for other options/suggestions.
3. Am I on the right track?? If this is not a good plan, could you make some suggestions for me?
Thanks so much for your insight!!
Shawn
It might be hard to get a loan with that credit score, however you might want to check to see if this is fico score or not since your fico score might be higher or lower than the vantage score. If you are using a bank or a CU you might have a better chance getting a loan with them but if you are approved, the APR might not be that great (though might still be lower than your CC). Doesnt hurt to check with your CU though and avoid any third party debt consolidation companies as those wont be helpful. Believe it or not though, using a loan to pay down or off your cards will help your score go up because you would be lowering the overall utilization of your cards down to 0%, if not close to it, however you may take a ding on your score due to a new account and an inquiry.
In regards to any suggestions, you could get a second job if you have the time. You could cut out any expenses that you dont need or that you can go without for awhile to throw more cash towards the cards. What I would suggest that you do though is to use myfico to check your scores with TU, EX, and EQ. If you dont want to use myfico, experian offers a $1 free trial for checking your three scores (make sure to cancel before the 7 day trial is up if you dont plan on keeping it).