i recently got a job with a bank and they are offering me a good interest rate to take out a debt consolidation loan. I have balances on 5 cards I am consolidating. I have had these cards for years since college. I really do want to close out all these accounts after its paid off with the loan but will that hurt my credit? I dont use these cards anymore either, they have been sitting in my basement for a very long time!
Also, is taking that loan a good idea? I am doing this because it saves me like $100 or more in interest a month and make it into one bill instead of 5 bills everymonth.
As for the loan I plan to pay the whole thing off in a year if I can even though the term is for 4 yrs. Is it worth doing what I’m doing if I’m able to pay my entire debt in a year? I owe 10K and its pretty much maxed out my cc’s.. My credit score is not bad but not great either and i intend to buy a house when all this is done.
thank you for your time in reading and responding to this. I appreciate your advice. I’m trying to fix my financial mistakes and now I can offord to and really want to do it.
Dave Ramsey says that 86% of the people who get a consolidation loan end up with credit card debt again. If you have your credit cards all paid for and have an emergency fund set aside, you won’t need a good credit score. I have been debt free for 30 years and have no idea what my credit score is. I don’t ever want to be in debt. In the book of proverbs it states “The borrower will be the lender’s slave.”
Closing Accounts = Bad. Paying off debt and being a good debtor = Good.
Rules to live by.
The short answer: bad.
Pay them off, put the cards in a safe place, use cash.
The credit looks good on paper.
Having one credit card is good for your credit because it shows a history of using credit wisely. Do not go over your limit and pay on time. I have one credit card that I pay the balance every month. It may seem silly but it is really good for your credit rating. Saving on interest is never a bad thing. Use the extra money to pay down your debt further not to get more into debt.
If possible, do not close out the cards. Your credit score is determined by your history of payment and available credit. Right now, your cards may be maxed out but if you pay off the cards with your consolidation loan, then it could have a positive effect on your credit score.
When your credit is checked, the bank or agency looking at your credit history will look at how much available credit you have. Right now, you would show that you have 5 accounts open with not too much available credit. If you pay off the accounts, you would then have 5 accounts with a lot of available credit.
If you close the accounts, you won’t have the benefit of having available credit; your credit history would show that you have no active accounts and no available credit.
If you have the discipline to not use the cards, try to keep them. If you want to close some, close the cards if they have low limits. Try not to close your older accounts. Good luck.
Check out http://www.ineedrates.com
If you need help, try this:
FREE debt consultation online. Featured on NBC. Get Your Consultation FREE of Charge:
http://www.wahor.net/debt