Showing results for 
Search instead for 
Did you mean: 

Personal Loan Debt vs. Credit Card Debt

New Member

Personal Loan Debt vs. Credit Card Debt

I have about $17,000 in outstanding revolving debt that I am considering paying off with a personal loan. I would pay off the credit cards and close all but 1 of them (my Cap One, which I love for international traveling) I've been denied by TD Bank for not having insufficient income for $18000. I am thinking about having my mother co-sign for the loan and do about $25k to pay off credit cards and to do some work around my house. Any thoughts if this will increase my scores as a personal would be an installment debt?

Starting Score: 694
Current Score: 711
Goal Score: 750

Take the FICO Fitness Challenge

Message 1 of 4
Established Contributor

Re: Personal Loan Debt vs. Credit Card Debt

That doesn't sound like a good idea. I think your best bet would be to pay down your debt, rather than moving it around and opening other lines of credit to cover it. You might experience an increase doing it that way, but do you have the funds to pay a $25k loan back? If a bank like TD is weary of lending you $18k because of insufficient income, why would you want to to get a co-signer and get a $25k loan?


I would focus on paying down the debt, and you should see increases when you hit the milestones.

AMEX PRG - NPSL I AMEX Everyday Preferred - $34.8k I Capital One Venture - $20k I Chase Sapphire Preferred - $25.5k I Chase Southwest Rapid Rewards Premier - $20.7k I Barclay Arrival + - $10k I Capital One Quicksilver - $10k I NFCU Flagship Rewards Visa Signature - $15k I NASA FCU - $10k I Texell FCU Visa - $5k I Chase Freedom - $9.9k I Citi Double Cash - $7.8k I Discover IT - $5k I NFCU CLOC - $15k I Total Unsecured Credit - $188,700

EQ FICO - 714 (5/24/16) I TU FICO - 772 (5/24/16) I EX FICO - 770 (5/24/16)
Message 2 of 4
Valued Contributor

Re: Personal Loan Debt vs. Credit Card Debt

I don't really agree with last poster.  I hate paying interest.  A personal loan is likely to have a lower interest rate and save you money in long run.  As for the cards, I wouldn't cancel them but sock drawer them.  My only issue is if you are really ready to turn the corner on your use of credit.  If you screw up with personal loan co-signed by your Mom, you will ruin her credit as well.  If you are really worried about using the now 0 balanced credit cards, maybe you shouldnt get a personal loan with your Mom co-signing.  In any case, be honest with yourself.  Can you control your finances?  If the answer is yes, I am all for doing what you can to reduce your interest and paying your debt down faster.

Message 3 of 4
Community Leader
Legendary Contributor

Re: Personal Loan Debt vs. Credit Card Debt


IF you can get a loan with that high of a debt to income, which is really iffy, you could benefit from overall lower interest, and reduction of revolving % util, so it is not a bad idea conceptually.  Maybe some of the saved interest can be applied against the principal on the debt.


The problem is that unless the debt is reduced, regardless of its flavor, the basic financial issue is not addressed.  One concern I have is the statement that you want a loan for more than the current debt, to be used for other personal purposes.  That is digging the debt hole deeper.  It is incurring more debt, with interest on that additional debt.


I suggest that a good think about addressing the debt, and not accruing more debt, would be in order as part of the plan.

Message 4 of 4