What will this do to my score?

Anonymous · ‎08-31-2009

I have about $14,000 in credit card debt with about 85% util. My score is 737.

I just took out a loan against one of my vehicles to pay off my credit card debt. Thus making my credit card debt $0 with 0% util.

However, I now have an additional $14,000 loan on my credit.

Will my score go up, down, or stay the same? Thanks,

Jonny

haulingthescoreup · ‎08-31-2009

Your FICO scores (plural) should go up, as the debt has shifted from revolving to installment. Installment util carries much, much less weight than revolving. You'll get a ding for the new account and inq, but overall, your scores should improve.

(brace yourself for some maternal fussing) Now the most critical thing is to keep from incurring new CC debt. If you don't, you'll wind up back where you were, but with the loan payment as well. Everyone knows this in their heads, but it doesn't always work out in practice.

I know that lots of time, CC debt is due to such one-time things as uninsured medical expenses and so forth. In these instances, there's little risk that the debt will reappear.

Anyway, shifting your debt to installment can be a good way to get out of high-interest CC debt and improve scores. Just don't let it bite you.

(fussing over; hope you don't mind)

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

Anonymous · ‎08-31-2009

Haulingthescoreup,

Thank you very much for your response. I just spent the last 7 years waiting for all the negatives to fall off my credit report. Now I have no negatives, just some incurred debts unfortunately. I have learned my lesson this time and refuse to allow myself to fall back into the trap...

I appreciate your fussing, most greatly appreciated. Thank you again,

Jonny

haulingthescoreup · ‎08-31-2009

Thanks for being so good-natured about it, and congrats on the clean reports!

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

creditwherecreditisdue · ‎08-31-2009

@Anonymous wrote:
I have about $14,000 in credit card debt with about 85% util. My score is 737.

I just took out a loan against one of my vehicles to pay off my credit card debt. Thus making my credit card debt $0 with 0% util.

However, I now have an additional $14,000 loan on my credit.

Will my score go up, down, or stay the same? Thanks,
Jonny

This was a pretty good move. Hopefully that number is a FICO score, that's all we can really gauge here. I think you are going to be very impressed with your FICO score shift moving from 85% UTIL to 0% UTIL. In FICO-land that makes a huge difference!

Anonymous · ‎08-31-2009

Keep us posted what this actually did for your score????

RobertEG · ‎08-31-2009

Shifting debt from revolving to installment is definately a positive FICO move, as it scores less.

I would also bet the the interest rate on the installment shift is less than the revolving interest rate on the CC, so it appears to also be beneficial from both a FICO and financial point of view.

The hit for the new installment loan inquiry will dissolve in 12 months.

Great planning!

Just dont F'up with any lates.

Message Edited by RobertEG on 08-31-2009 11:49 PM

Anonymous · ‎09-01-2009

Thank you everyone for your kind responses. To answer your questions:

Yes - this is my Fico score (737)

My interest rate more than halved. I calculated I will save approximately $4500 in interest rates over 3 years.

I will certainly let you know what it does to my score.

Don't worry, I haven't had a late payment in 7 years and refuse to start now. The loan is through my work credit union so I have it directly withdrawn from my paycheck - hence no opportunity for a late payment.

Thank you again for your kindness. Regards,

Jonny

creditwherecreditisdue · ‎09-01-2009

@Anonymous wrote:
Thank you everyone for your kind responses. To answer your questions:

Yes - this is my Fico score (737)
My interest rate more than halved. I calculated I will save approximately $4500 in interest rates over 3 years.
I will certainly let you know what it does to my score.
Don't worry, I haven't had a late payment in 7 years and refuse to start now. The loan is through my work credit union so I have it directly withdrawn from my paycheck - hence no opportunity for a late payment.

Thank you again for your kindness. Regards,
Jonny

You are going to be pretty amazed by what getting away from the 85% UTIL level will do for your FICO's!

Anonymous · ‎09-01-2009

Well my score jumped up 12 points today to 749. My #1 goal has always been to break into the 800's. Anyone think I may pull it off? Does 85% Util to 0% Util warrant 51 Fico points?

Your bets please Just joking.

Regards,

Jonny