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Credit Score question, Please Help ASAP!!

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ras_34
Established Member

Credit Score question, Please Help ASAP!!

Hello forum and thank you in advance for your advice!  I am 30k in credit card debt but was recently pre-approved for a So-FI personal loan of 21k @ 9%.  I am very happy with this 3 year loan but I am currious about something.  My curent EQ score is 699 with that debt.  If I accept the loan, will my credit score take a nose dive?  I know ia m not erasing debt, just moving the numbers around, but will my score increase because of the loan and decrease of "credit card debt"?  I am obviously using the 21k for my credit card loan and will not be using my credit cards for the exception of maybe 1-2 of them but paying them off each month.  At the end of the 3 year loan, I am looking at buying a house, hopefully.  Is this a good idea you all?? I am just really nervous because I have brought my score from 620 to at one point 750 now back down to 699.  I haven't managed my debt that well but I just need reassurance that I am doing the right thing.  Please let me know if there is any additional information needed.  Your advice is truly appreciated.

Message 1 of 5
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DollyLama
Established Contributor

Re: Credit Score question, Please Help ASAP!!

Will this be your only installment loan open on your reports? (10% of FICO scoring is revolving debt and installment debt), if this will be your only installment loan (includes,student loans, consumer finance loans), you may get a bump for having it in the mix. If this will not be your only one, may be dinged for the utilization. 

 

Credit Cards, have only one card ever report a balance, you are penalized for zero balances on all, so carry at least $10 on one card monthly. 

 

In a year, the inquiry for loan will no longer be scoreable. 

 

By the time in 3 years, with the low not zero utilization on CCs overall, and the paying down your installment your numbers will increase. Once the balance gets below 9% of the opening tradeline, credit, you receive the biggest boost. If it is the only loan and paid off, your score will drop, as FICO wants it in the mix.

 

Just make sure at least 6 months before you think you are ready to buy, to check your mortgage scores, not the FICO 8 scores then, and advice from the expert members can help you reach prime score obtainable for you for the mortgage. 

 

For mortgage loans, they may are most likely to look 2 years into the past on any hard inquiries against your reports. 

Message 2 of 5
Anonymous
Not applicable

Re: Credit Score question, Please Help ASAP!!

To dovetail on what DollyL said, your score will actually go up a good deal very soon.  That's because a huge chunk of your CC debt will get paid off in the next month.  FICO will love that.

 

Continue to work on steadily paying off all of your CC debt at the fastest comfortable pace you can, and your score will go up even more.

Message 3 of 5
SouthJamaica
Mega Contributor

Re: Credit Score question, Please Help ASAP!!


@ras_34 wrote:

@Anonymous forum and thank you in advance for your advice!  I am 30k in credit card debt but was recently pre-approved for a So-FI personal loan of 21k @ 9%.  I am very happy with this 3 year loan but I am currious about something.  My curent EQ score is 699 with that debt.  If I accept the loan, will my credit score take a nose dive?  I know ia m not erasing debt, just moving the numbers around, but will my score increase because of the loan and decrease of "credit card debt"?  I am obviously using the 21k for my credit card loan and will not be using my credit cards for the exception of maybe 1-2 of them but paying them off each month.  At the end of the 3 year loan, I am looking at buying a house, hopefully.  Is this a good idea you all?? I am just really nervous because I have brought my score from 620 to at one point 750 now back down to 699.  I haven't managed my debt that well but I just need reassurance that I am doing the right thing.  Please let me know if there is any additional information needed.  Your advice is truly appreciated.


 

Assuming you have no installment loans at present, in the short run you're going to

-gain points from reducing credit card debt

-gain points for adding an installment loan to your "credit mix"

-lose points for having a high utilization installment loan report

As to whether this short term turbulence will result in net gain or loss, no one can say with certainty.

 

But since the points lost for the high utilization installment loan will dissipate over time and since

your target for the mortgage application is 3 years down the road, you should be lovely so long as you

don't replace the credit card debt with new credit card debt.

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 4 of 5
Anonymous
Not applicable

Re: Credit Score question, Please Help ASAP!!


@ras_34 wrote:

 

@I am 30k in credit card debt but was recently pre-approved for a So-FI personal loan of 21k @ 9%..... I am obviously using the 21k for my credit card loan and will not be using my credit cards for the exception of maybe 1-2 of them but paying them off each month. 


 

Hello Ras!  Can you tell us what your total credit limit is right now?  That's where you add up all the credit limits of all credit cards.  (Not the balances, but the credit limits.)

 

I was guessing that your total CL was probably not that much more than 30k.  (Like maybe 40k, say.)  If so, using the loan to pay off 21k of your CC debt will give you a huge boost quickly.  But untill we know what your total CL is, we can't say for sure.

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