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Getting a Personal Loan to Increase Credit Score


vexor3
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The last post in this topic was posted 4148 days ago. 

 

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I have $14,000 of credit card debt. Most of the credit cards are high revolving, meaning that they are almost at their limits, but off by about $750 or so from the limit on each card. I have an opportunity to get a personal loan to pay this off at around a 10% interest rate (and a 5 year payback)

 

Question: Would getting the personal loan and paying off the credit card debt in full (and not using the cards again) increase my credit score? I know that it is really robbing peter to pay paul, but there is a big difference in the way the scores are calculated when it comes to revolving credit v. installment loans.

 

I wanted to get everyone's take on this question.

 

Thanks everyone!

 

 

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Yes. Most people that get in trouble with this route cannot contain themselves and max out the credit cards again - doubling their debt.

this times a 1000. Please beware because it could easily become $14 K in a loan and ANOTHER $14 K in new credit card charges. Some people can't control themselves.

 

But yes, it would indeed make your scores jump.

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And at a 10% rate your probably saving money as well. Just dont charge the cards up again :)

 

As others pointed out the fact that you have about 16k CC CLs and have run 14k of debt is the problem. While moving much of this to a long term loan will help your credit scores, if you run your cards back up you will just be digging a bigger hole. Worse, if you use a better credit score to increase your CC CLs you could dig an even deeper hole.

 

Really, the question should be can you control your spending. If so it would be a good move. If not it could be the worst move you make. Only you know the answer as to whether you can avoid the siren song of more available credit.

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