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Lowering My Utilization with a Personal Loan

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New Member

Lowering My Utilization with a Personal Loan

Here is my situation, I currently have a ~610 score. The main thing hurting me is my utilization (75%). I am considering a personal loan to pay off my CCs, but the issue is the rates I am seeing aren’t much better than CCs (around 23%). Would it be possible for me to get a personal loan at this rate, which should raise my score by reducing my utilization. Then refinance that personal loan once my credit score goes up.
Message 1 of 6
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Member

Re: Lowering My Utilization with a Personal Loan

I am actually in the same boat. I am thinking of doing the same thing. Get a loan, pay everything off, then re finance in 6 months.
MyFico8
3/1/18 EQ603/TU621/EX636
MyFico9
EQ571/TU587/EX597
Opened since October: Capital One $500 / NY&Co $500 / Victoria's Secret $750 / Fingerhut $800 / NFCU CashRewards $1300 / BECU VISA $7500
Currently at 89% Utilization combined
0 Collections or Judgements
Message 2 of 6
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Regular Contributor

Re: Lowering My Utilization with a Personal Loan

Do you have a relationship with a CU?  They would offer you a better chance of fixing it.  The personal loan will be rough, sometimes they report negative on your CR as a Consumer Finance, then your hoping to refinance which isn't a guarantee...best bet is with a CU you have a relationship with or even a local bank, someone you can sit down with face to face.  OFC everything might work out just the way you stated (planning) however, its not a sure thing and could backfire on you with the personal loan.  This ofc is my opinion and not gospel by no means. Good luck in trying to get it under control.

Message 3 of 6
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Valued Contributor

Re: Lowering My Utilization with a Personal Loan

There would be pros and cons with a loan, depending on your profile. It could help your credit mix. But overall, I am not sure it will really make a big enough difference to achieve any credit goals you may have, aside from simply seeing the number go up a bit. It may or may not help reduce your expenses, which, if I may say, seems like the real issue if you need a loan to get your balances down. I agree with the advice to talk to a credit union (join one if necessary) and ask what they suggest or what they can do to help. Good luck!


Young profile, but no derogs. In March of 2019, I had no open accounts, a charge-off, two collections, and scores in the low 500s. The only thing in my signature that was on my CRs then was the old closed Exxon card. I am a MyFICO monthly paying customer. One might think my perspective would be welcome here, but ...
Cards

Authorized user / Corporate / Auto loan

Card CLs total $81,100, not counting the AU card. In March 2019, card CLs totaled $0. In April 2019, card CLs reached $500. Since then, I received a lot of great advice on this board, as well as a lot of advice I didn't take, that is good for most situations, but not mine. Bronze spade on July 3.
Closed but still on reports: ExxonMobil, $950, 10/08-02/11 (Equifax only) | Citi secured, $200, 04/19-09/19 | Capital One secured, $300, 04/19-08/19 | My Jewelers Club, $5,000, 05/19-08/19 | Green Dot Primor, $300, 05/19-08/19 | Self Lender secured $500 loan, 04/19-01/20 | Unsecured personal loan from Coastal, $1,000, 06/19-08/19.
Message 4 of 6
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Valued Contributor

Re: Lowering My Utilization with a Personal Loan

The problem with Personal loans are debt to income ratio! Most CU/Banks want less then 30%

 







       
Message 5 of 6
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Contributor

Re: Lowering My Utilization with a Personal Loan

Wouldn't you need to take out a loan that is much larger than what you owe on the credit cards, pay them off, then use the remaining cash from the loan to pay down the loan principle to decrease utilization? Or are credit cards and loans Utl separate? 

Ch 7 Discharge 10/15/2018

Started 10/18: Eq Fico 9 ???, Ex Fico 9 620, Tu Fico 8 511
Current 8/3: Eq Fico 9 736, Ex Fico 9 717, Tu Fico 9 704 Fico 8 655

Cap1 Plat PC to QS 1.5k, Discover it Chrome Secured $500, NFCU GoRewards 2k (was Secured nRewards $500), Share Loan 1k (paid down to 8% due 2/2020), VentureOne 1k, NFCU CLOC 1k, OllO Optimum $800
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