Credit card refinancing questions

[richard200593]

try to make this as short as possible- paying off credit card debt with a personal loan at still a relatively high interest rate. Credit is poor strictly due to high balances on all of my cards, all “credit analyzer tools” are expecting 100 point jump in my credit once cards are paid off as there are no other marks on my credit. Is it smart IF this happens to refinance another personal loan to pay off the high interest loan?

Ps- credit card debt is from years of being young and foolish, I have my finances under control now, just trying to tackle the previous mistakes.

[Clarkstar]

Shop around to find a low interest rate... sometimeS credit unions are a good start...

[Clarkstar]

Check out Barclay card .Com


I just refinanced a loan with them, best rates I could find

[richard200593]

I had shopped around for a while and was having a hard time finding a loan, I have a low 600 score at the moment, but hoping if the analyzers are right that this loan will shoot me to a low 700, which would be enough to refinance the loan at a much lower rate. At least that’s the goal

[Clarkstar]

Try Barclaycard.com....

[richard200593]

I actually tried them, I also have a card thru them already. Could not get approved for the amount I needed

[Mr_Draco]

1st, imo you need to actually spend time and most likely some money to talk to a professional to make sure you get the right answers and not ask random people on here.

2nd, while paying off your cards will increase your score, realistically you won't see a 100 point jump. Also keep in mind the amount of debt you have plays a part in your score. You're not eliminating your debt (the only real way to raise your score at this point), you're just shuffling it around. Opening up one big personal loan to pay off your cards will drop your score as much as paying off your cards will raise it causing your score to stay roughly the same.

[Abelardoo_12]

Lending club is what you need, its not a bank nor a credit union. Its a peer to peer loaning union that will give you a really low interest, it was 11 point something for me. Which is amazing compared to the 21-23 most credit cards have. They will request check stubs and other documents before processing your loan and will take about a week after you get approved to get the founding for your loan and after that it’ll deposit straight to your bank account. I really dont think there’s anything else out there better than this.

[h422694]

I pretty much agree with Mr Draco. Opening another loan to pay existing debt will not increase your credit score, but will probably reduce it. Every time you apply for credit they normally run a "hard" credit check. Whether it's approved or not, your rating just got lowered by a few point for up to 2 years. If you attempt to buy a car your dealer could try 4-5 lenders and you get hit for a couple points by each. You can get a free credit report once a year from each of the 3 major credit agencies, Trans Union, Experian, and ??. Get a report from 1, wait just over 4 months, get a report from the 2nd one, wait 4 months again and get the report from the 3rd one. This way you can have a current report of your history. You can also sign up for Credit Karma for free and get your current scores weekly from them. This shows your score and what caused it to go up or down during that period and also provides some general suggestions on changes needed. .
Some state agencies will work with you to develop a plan to help get your cards paid off. Most provide this assistance without charge. A word of caution - there are a lot of scammers who will help but it will end up costing you a lot.
Some good advice I've ever heard was to : 1 - stop using most cards and only use 1 or 2 with the lowest rate and keep those paid off. 2 - use any additional money to pay towards the card with the highest interest. Once that card is paid off, cancel it and start additional payments to card with next highest interest. Continue until cards are paid off. There is no way to improve your credit by opening new credit and improving your rating by a large amount does not happen in a short period of time. . Best advice was already given to you. Get some help from a reputable agency or company that specializes in that area.

[richard200593]

Originally Posted by Abelardoo_12

Lending club is what you need, its not a bank nor a credit union. Its a peer to peer loaning union that will give you a really low interest, it was 11 point something for me. Which is amazing compared to the 21-23 most credit cards have. They will request check stubs and other documents before processing your loan and will take about a week after you get approved to get the founding for your loan and after that it’ll deposit straight to your bank account. I really dont think there’s anything else out there better than this.

This is exactly what I did except was not qualified for lending club, but the company I went with is basically exact same concept.

[richard200593]

I appreciate everyone’s input, the way I understand it having an installment loan like I took out on your credit does not go against your debt utilization ratio, the same as having a car or house on your credit it does not affect your score nearly to the extent of having credit cards maxed out on your report. 100 points was what credit karmas analyzer told me it would go up going this route, I agree that it seems highly unlikely and unrealistic which is why I was asking if anyone else had tried this method. I already have the loan and will know within the next month or two how it affected my credit. My Hope is that if credit karma is right, I will be able to refinance the loan and get a lower rate than my current loan.

[pyroguy]

Originally Posted by richard200593

try to make this as short as possible- paying off credit card debt with a personal loan at still a relatively high interest rate. Credit is poor strictly due to high balances on all of my cards, all “credit analyzer tools” are expecting 100 point jump in my credit once cards are paid off as there are no other marks on my credit. Is it smart IF this happens to refinance another personal loan to pay off the high interest loan?

Ps- credit card debt is from years of being young and foolish, I have my finances under control now, just trying to tackle the previous mistakes.

Is it smart to transfer debt from one place to another? Only if the interest rate drops and the term to pay it off stays the same or decreases. The real question is what are you going to do to keep from racking up debt again once this is paid off?

Credit scores are only good if you're looking to borrow money again so a credit score is more like an "I love debt" score. Some will argue that you have to have credit so you can buy a house and that is 100% false. You can get a home loan with a zero credit score using manual underwriting, a term your lender should know, if they don't you're using the wrong lender. IMO, the expectation of jumping your score 100 points is irrelevant.

Personally I would recommend if you can get a lower interest rate and pay the debt off in equal time or less then a transfer of debt is not a bad way to go. Just don't load the cards back up when you transfer the debt and you will be ahead.

Also, DO NOT take a loan out that will put your house as collateral. Credit card debt is unsecured debt where putting a lean against your house is secured debt. If things go south for you financially, you have an option to keep your house in a bankruptcy and still eliminate credit card debt, but if the debt has gone against your house because you transferred it in a refinance loan then that debt is now against your house and cannot be eliminated without losing the house.

[richard200593]

Originally Posted by pyroguy

Is it smart to transfer debt from one place to another? Only if the interest rate drops and the term to pay it off stays the same or decreases. The real question is what are you going to do to keep from racking up debt again once this is paid off?

Credit scores are only good if you're looking to borrow money again so a credit score is more like an "I love debt" score. Some will argue that you have to have credit so you can buy a house and that is 100% false. You can get a home loan with a zero credit score using manual underwriting, a term your lender should know, if they don't you're using the wrong lender. IMO, the expectation of jumping your score 100 points is irrelevant.

Personally I would recommend if you can get a lower interest rate and pay the debt off in equal time or less then a transfer of debt is not a bad way to go. Just don't load the cards back up when you transfer the debt and you will be ahead.

Also, DO NOT take a loan out that will put your house as collateral. Credit card debt is unsecured debt where putting a lean against your house is secured debt. If things go south for you financially, you have an option to keep your house in a bankruptcy and still eliminate credit card debt, but if the debt has gone against your house because you transferred it in a refinance loan then that debt is now against your house and cannot be eliminated without losing the house.

Thank you this is definitely what I had in my head and what I was hoping to hear. As stated the debt is from years ago than I could never got on top of, I have a plan in place to only use the cards enough to keep them active. The interest rate I received on the loan I was approved for is slightly better but not by much than my credit card terms, which brings back why I was saying IF my credit goes up a good amount (which I’m basing off of professional opinions and credit analysis tools) could I not turn around get a better loan at a lower rate, pay off this high rate loan in full, and end up with only one installment debt, and a low rate? I know there are a few ifs in this but theoretically it sounds like it should work.

[richard200593]

Just as an update for those in the same position as I was, all 3 of my credit scores went up between 70-90 points in a little over a month once I paid off all my cc debt with my personal loan. All 3 are close to 720 now, currently working on getting approved for a much better rate personal loan to pay off the old one. The only issue I’m running into is creditors that Dig deep into my report are seeing “my plan” but I’m still in a much better boat than I was 2 months ago. Credit will take a big hit with so many inquires, but at only 10 percent of my score I’ll take it for 2 years.