Balance transfer and credit score

[Anonymous]

So my question is about a balance transfer from a loan over to a credit card.
I have a personal loan through the Lending club original amount was for $6000 and balance of $4400 with $195 monthly payments.
I am looking to pay that off with a balance transfer to my Discover card. I have 14 month 0% available on the Discover.
I have been pre approved for a mortgage of 175k about 3 months ago. This will be new construction but now I am waiting for a road to be put in. So it will be 6-12 months for house to be built or maybe longer.
My mortgage scores are 686,701,710 if I would do this transfer how bad a hit would my credit take a hit and for how long?
Accounts are
Car loan original $12900 owe $8800 payment of $245
Lending club original $6000 owe $4500 payment of $195
Jc Penny 0/1500
Cap one 125/2750
Walmart 0/10000
Mattress Firm 250/3000
Discover 140/11000
Also have a car that I consign for my daughter that is being sold this month original $25000 owes $23000 with payment of $430

I did have a chapter 7 discharged June 2009
I have no other bad remarks other than that on my reports

[HeavenOhio]

I'd pay down most of the Lending Club loan via the balance transfer. But I'd keep it open. Losing the $6,000 original loan amount on your credit report may hurt you. Finish paying off Lending Club after your mortgage closes. Someone here can likely offer more detail as to how to do this.

As far as the Discover card goes, if you pay the balance down to $2,500 by the next time your mortgage scores are pulled, with all other cards reporting a zero balance, you should be OK in the card utilization department. That would have you under 8.9% of the total card utilization threshold necessary for optimum scoring.

Also, don't apply for any new credit between now and the time your mortgage closes.

[Anonymous]

Will not having the one car loan on my credit report not be better than have two open loans?
I really want to pay off the Lending club loan. Also Myfico says having this type of loan is hurting my credit score.

[Anonymous]

The only reason to consider transfering a balance to a 0% credit card is so you can keep it on the card for several months and pay it off gradually.  If you were to do that, however, it will cause your credit card utilization to go up by a significant amount which will hurt your score.  It's unclear to me when final underwriting on your home loan will occur, but I'd guess it will be before you start building.

This is a terrible time to try to do the BT, given that you will soon take out a loan for a house and your scores are borderline.  Far better is to do things that have zero chance of hurting your score and some chance of improving it.  One example is paying all cards to zero except one (AZEO).  The remaining card with the positive balance could be your Discover and you could continue to allow it to report a couple hundred dollars (or less).  AZEO would be a cheap thing to try that might help your mortgage scores and couldn't hurt.

What is the fee for the BT and what is the interest rate on your Lending Tree loan?

Can you explain more fully exactly what myFICO says about the LT loan harming your scores?  I presume you have the myFICO Ultimate product, right?

[Anonymous]

Thanks for the replies
The interest rate on the loan is 10.5%. Myfico said that it is a finance company loan and that they count against your score.
I really don't like dealing with Lending club they make it hard to pay ahead/extra payments plus it would bring down my DTI down by $100 a month but I would be paying $300-400 a month on the Discover card to bring down my balance if I would do the transfer.
And the builder would be carrying the construction loan until I'm ready to close and that could be up to a year or longer.
Note I am not exactly sure what Myfico had called this loan it has been a month since I saw the report but I know it said something about being a finance company and that it was hurting my score.

[HeavenOhio]

Yeah, FICO doesn't like consumer finance loans. But even if you close it, it's going to remain on your report indefinitely.

Where the Lending Club loan can possibly help is with your loan utilization. Add up your car loan and your Lending Club loan, and you owe $13,300 out of original loan amounts of $18,900, i.e. 71% of your original loan amounts. Pay off the Lending Club loan tomorrow, and you owe $8,800 out of the original $12,900, or 69%. Pay off all but $500 of the Lending Club loan, and you owe $9,300 out of $18,900. That's 50%. I don't know where the scoring thresholds are for loans. The gurus would have to address that. But it's something to chew on.

Credit card utilization is much harder on scores than loan utilization. However, with your plans to pay down the balance, you might be OK by the time your scores are pulled again. Ideally, you have one card reporting a very small balance with the rest reporting zero. That's the safest for scoring purposes.

As far as DTI goes, it's not going to matter if it's on loans or cards unless the bank has rules that aren't related to FICO scoring.

[Anonymous]

If you have a negative reason statement attached to your mortgage scores that say this you have a CFA then it is possible that paying it off could help.  Somebody recently posted about paying off a CFA and getting some help.  Until I saw that post the received wisdom was that paying off a CFA did not lower the penalty, but perhaps it does.

And if the underwriting for the loan won't happen for a year, then there may be a case for paying it off and seeing if that helps.  Certainly it will be better for the interest you are paying.  Would you be able to pay off the Discover card before the 0% promotion ends and within the next nine months?

[Anonymous]

I have a plan to pay off the transfer in 12 months. I will have all other cc paid to 0.

[DollyLama]

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@Anonymous wrote:
I have a plan to pay off the transfer in 12 months. I will have all other cc paid to 0.

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CCs not all zero, as CGID suggested, all zero except one, let one hit with a small balance, at least $10.00 , FICO does not like all 0 balances, and can drop your scores a good deal, doesn't matter what score model.

[marty56]

If you do the BT, your DTI will go up because the Discover payments would be higher so that could affect your approval for the mortgage unless you can PIF before you close.  If you do the BT, make sure the Discover is PIF and then sock drawer until it is PIF.  I will also assume your Daughters car is being sold for more than is owed or you can PIF the difference.  Dpending on the length of your mortage, you could refi later on when your scores are the max for the best mortgage rates so I would just focus on doing what it takes to get the loan.  Nothing else matters.