I have a CC with orchard at 29% interest. I'm considering taking out a loan from the bank for the payoff amount as the interest is 10 pts lower. My credit score is 610 at its best and 548 at its worst. I'm looking to improve my credit, but am vasilating if this is the right way to go. Thoughts?
It wouldn't hurt but, then again, if the bank reports a new account it will lower your scores likely. You will likely have an offset between the lower balance/better utilization and the new account posting.
It might take your score down initially, as Apex points out. A lot of it depends on the rest of your file. If the loan would be your only installment loan, once the "newness" of the history wears off, it could help the mix of account types. Plus, as Apex said, it would help your utilization. Just make sure you don't run up the card again. Over the long term you'll pay off your debts faster and have more disposable income, since the rate you're paying will be less. This means you pay less interest over the long haul.
It won't be my only installment, it will be my third (one short term of the same nature that I just paid off with my credit union and my car loan).
Are you planning any major purchases in the near future that require you to apply for credit? If not, I wouldn't worry about the score as much as getting the debt paid off. You score will improve over time.
