Which option is best? CC or Installment Loan

[castor4072]

Looking to do a bathroom remodel...which one would have a bigger impact on my credit score, utilization % higher or an installment loan payment? What to do, what to do.

Cas...

[Revelate]

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@castor4072 wrote:

Looking to do a bathroom remodel...which one would have a bigger impact on my credit score, utilization % higher or an installment loan payment? What to do, what to do.

Cas...

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Unless you get a 0% financing deal on a CC, generally an installment loan is much cheaper if you're going to have to carry a balance, far less negative from a FICO perspective, and depending on your file, might even be a FICO positive.

[gdale6]

General consensus is the installment loan would be better and have less of a score impact than raising your revovlving CC percentages. The only case you may get away being able to use CCs is if you have a large amount of total credit available and a hit of say 15K doesnt dent your utilization too much.

[takeshi74]

It's not quite so cut and dry.  Clarify exactly what you mean by best.  Score is one thing to consider but you really should consider what works for your specific situation unless you're intending to apply for other credit immediately after starting this remodel.  If not, then you'll have time for your score to recover regardless of the one you choose.  What your credit qualifies for can also have an impact on which might be a better option for you.

The balance on an installment will have less impact than the revolving utilization on a card.  However, impact to revolving utilization depends on your current revolving utilization and the utilization on the card that you use for the remodel.  It could be low enough to have a negligible impact.  It could be high enough to have a significant impact.  Without the specific numbers it's impossible to even guess.

If you can get a 0% offer on a card and pay it off before the offer expires then the interest on the 0% would be better.

Depending on your credit profile, the installment may help with mix of credit.  However, you haven't provided enough information for us to really say one way or another.  You'd have to look at your current mix.

Both will reduce AAoA and incur a hard pull.  Both will be considered new accounts until they have sufficiently aged.

[castor4072]

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@takeshi74 wrote:

It's not quite so cut and dry.  Clarify exactly what you mean by best.  Score is one thing to consider but you really should consider what works for your specific situation unless you're intending to apply for other credit immediately after starting this remodel.  If not, then you'll have time for your score to recover regardless of the one you choose.  What your credit qualifies for can also have an impact on which might be a better option for you.

The balance on an installment will have less impact than the revolving utilization on a card.  However, impact to revolving utilization depends on your current revolving utilization and the utilization on the card that you use for the remodel.  It could be low enough to have a negligible impact.  It could be high enough to have a significant impact.  Without the specific numbers it's impossible to even guess.

If you can get a 0% offer on a card and pay it off before the offer expires then the interest on the 0% would be better.

Depending on your credit profile, the installment may help with mix of credit.  However, you haven't provided enough information for us to really say one way or another.  You'd have to look at your current mix.

Both will reduce AAoA and incur a hard pull.  Both will be considered new accounts until they have sufficiently aged.

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Thanks for your input...this is my information as much I can tell.

1. CC util is at 15%

2. CC APR is 12.99% (credit card that I would use to put the remodel on)

3. Installment loan is at 14.65% for 9k loan (Lending Club) I know the interest is high.

4. Even tried the "Score Simulator" tools to see how it would impact my score or which way to go...NO LUCK on that.

Need more info...please let me know.

[jamie123]

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Thanks for your input...this is my information as much I can tell.

1. CC util is at 15%

2. CC APR is 12.99% (credit card that I would use to put the remodel on)

3. Installment loan is at 14.65% for 9k loan (Lending Club) I know the interest is high.

4. Even tried the "Score Simulator" tools to see how it would impact my score or which way to go...NO LUCK on that.

Need more info...please let me know.

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It would be nice if we had a more complete idea of your credit history to be able to give you accurate advice.

1. How many open credit cards do you have?

2. How old is your oldest credit card?

3. How old is your youngest credit card?

4. Do you have any open installment loans on your reports? Student loans? Auto loans? Mortgage? Their ages?

5. Do you belong to a Credit Union?

6. Do you know what your credit scores are? Where did you get your scores?

7. Do you have any baddies on your reports? Lates? Charge offs? Collections?

[castor4072]

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@jamie123 wrote:

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Thanks for your input...this is my information as much I can tell.

1. CC util is at 15%

2. CC APR is 12.99% (credit card that I would use to put the remodel on)

3. Installment loan is at 14.65% for 9k loan (Lending Club) I know the interest is high.

4. Even tried the "Score Simulator" tools to see how it would impact my score or which way to go...NO LUCK on that.

Need more info...please let me know.

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It would be nice if we had a more complete idea of your credit history to be able to give you accurate advice.

1. How many open credit cards do you have?

2. How old is your oldest credit card?

3. How old is your youngest credit card?

4. Do you have any open installment loans on your reports? Student loans? Auto loans? Mortgage? Their ages?

5. Do you belong to a Credit Union?

6. Do you know what your credit scores are? Where did you get your scores?

7. Do you have any baddies on your reports? Lates? Charge offs? Collections?

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1. 8 open credit cards

2. 5 years old on oldest CC

3. 2 months youngest CC

4. I have auto loan, school loan, Mortgage

5. Do not belong to credit union

6. credit scores are 690 across the board. Fico...from my credit card sites.

7. No lates

Hope this helps.

[jamie123]

Yes, that information certainly helps!

Having another installment loan wouldn't help or hurt your score much. Your scores would probably drop slightly for a few months once the new loan reports but would go up as the loan ages and gets paid down.

Having a high balance on a credit card could be a big hit to your scores but your scores would recover as you paid down the balance.

By having scores of 690 with your credit profile you must have a lot of new credit. I might suggest stopping in at a local credit union and seeing if they would give you a loan. I believe that "Lending Club" is considered a high risk lender. That is why they are quoting you high interest rates. Having a high risk lender on your reports could be detrimental to your credit scores for the long term.

At 15% interest it is not worthwhile to do the remodel in my opinion. It would be like buying a car with a credit card. Not a good idea.

One of my credit unions is quoting personal loans at 11.9% and another is quoting personal loans at 9.9%.

Your best bet would be to apply for a HELOC (Home Equity Line of Credit) with a credit union. You should stop into a local credit union and talk to them about it. A HELOC is a line of credit that is tied to the equity in your home and unlike the other options we have discussed, once a HELOC is paid off it stays open on your reports and will help your scores. You will then have the HELOC to use on other home improvements or emergencies that might crop up. My local credit union is currently quoting rates as low as 4% for HELOCs.