Getting a Personal Loan to Increase Credit Score

[vexor3]

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!

 

 

[whitesol]

yes.

[lpkirby]

yes.

+1

[stroked89coupe]

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

[mariuszh]

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

[Art_Vandelay]

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.

[Lana]

where are you getting the loan from if I may ask?

[Klesko]

I did this recently as well. i got a lending club loan to consolidate all my cards.

[cashnocredit]

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.