Consolidate or play the long game?

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spy23714
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Consolidate or play the long game?

Postby spy23714 » Thu Dec 24, 2015 5:24 pm

I'm in the market for buying a new car, but I have two credit cards with a balance that I'd like to pay off before I buy anything. The two options I'm considering are a debt consolidation loan or paying the credit cards off month by month as I can.

I'm trying to choose whichever option will improve my credit the best before applying for a vehicle loan and I'm looking for advice. Should I take the loan and pay off the credit cards and just have the one payment at a lower interest rate, or should I just continue to pay them off little by little as I get paid? My concerns obviously are the extra inquiry for the loan and the hit I'll take on the AAoA, but I've had a friend in the same predicament take out the loan and his score has improved greatly over the last 6 weeks.

Any and all advice appreciated in advance!


ingramjuan
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Re: Consolidate or play the long game?

Postby ingramjuan » Fri Dec 25, 2015 10:22 pm

spy23714 wrote:I'm trying to choose whichever option will improve my credit the best before applying for a vehicle loan and I'm looking for advice. Should I take the loan and pay off the credit cards and just have the one payment at a lower interest rate, or should I just continue to pay them off little by little


It would be my suggestion is not to take out a loan and just pay down your credit cards. Having another HP on your report will not help your credit score.
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kdm31091
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Re: Consolidate or play the long game?

Postby kdm31091 » Sat Dec 26, 2015 8:10 am

I'd pay off the cards before you get the loan if possible.

spy23714
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Re: Consolidate or play the long game?

Postby spy23714 » Sun Dec 27, 2015 10:56 pm

ingramjuan wrote:
spy23714 wrote:I'm trying to choose whichever option will improve my credit the best before applying for a vehicle loan and I'm looking for advice. Should I take the loan and pay off the credit cards and just have the one payment at a lower interest rate, or should I just continue to pay them off little by little


It would be my suggestion is not to take out a loan and just pay down your credit cards. Having another HP on your report will not help your credit score.


I had a friend go through the same lender I'm considering and after taking the loan and paying off all debt minus the loan, his score improved almost 60 points over 2 months. And that's after the HP hit his report.

takeshi
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Re: Consolidate or play the long game?

Postby takeshi » Thu Dec 31, 2015 8:33 am

Impact is never just about the change itself but one's credit profile as well. How similar is your friend's credit profile to your own?

I'd +1 the suggestion to just pay down the balances. Get yourself in better shape versus looking for instant gratification. Credit is a long game.



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