Consolidate - Improve Cr Score?

Discussion in 'Credit Talk' started by $wealth$, Jun 14, 2001.

  1. $wealth$

    $wealth$ Well-Known Member

    Hi Everyone,

    I reviewed my credit on-line today via Credit Expert and decided to pay off most of my department store accounts by way of obtaining a personal unsecured loan.

    I called HFC, and applied for a $ 10,000 loan. Within 1 hour the rep told me I was approved for $ 6,500 and I could pick up a check by days end.

    Here's the question - Even though my debt load remains the same, will having 10 accounts paid off with one new contract loan improve my score or will it have no impact at all?

    The neat thing about this is that it will be more manageable, I will now have one check to write instead of 10. Also, my monthly outlay of cash is now reduced by approximately $ 150.00. HFC also approved me for $ 1000.00 cc aside from the loan. The downside, apr. 24.9%.

    I just wanted to receive feedback if this is a positive direction to go in regards to my score.

  2. DaveLV

    DaveLV Well-Known Member

    I can't cite you chapter and verse, but I've heard that loans from a finance company like HFC can actually damage your score. Can anyone else be more specific?
  3. judyputy

    judyputy Well-Known Member

    I can't be more specific, but I can say that I have heard that also.

    Some people..lenders mostly view "Finance company" loans as a "last ditch effort" to get hold of some money. Since they are not bank loans.
  4. Shantel

    Shantel Well-Known Member

    Who is HFC?
  5. $wealth$

    $wealth$ Well-Known Member

    HFC is Household Finance Company.

    Do you think having less accounts with balances will improve my score even though the total debt is the same?

    My credit report will now show:

    1- Mortgage
    1- Auto Loan
    1- Revolving Cr Line w/ HFC
    10- Paid (0) balance credit cards. Visa/MC & Department Stores

    Feedback please.

  6. Shantel

    Shantel Well-Known Member

    What the other posters are saying Wealth is that the benefits of having 10 paid/closed by consumer accounts might be outshined by the fact that you are using a finance company.

    Also, if you check the Equifax scoring guide, it states that moving balances around from one card to another don't really help you.

    Lastly, at 25% APR....could you be transferring cards with lower APRs to this account just to only have 1 payment? That wouldn't be wise. Also, showing a payment history on a number of cards always looks better than just one.

    I might be way off base here...who knows?
  7. $wealth$

    $wealth$ Well-Known Member

    Thanks for your response Shantel. You have given me some information to consider before the deal is finalized. I still have 3 day right to rescind.
  8. Donna

    Donna Well-Known Member

    25% APR is outrageous! Personally, I wouldn't accept the loan. It's a rip-off!

    Are you affiliated with any credit union? If so, would they be willing to give you a debt-consolidation loan?

    As to whether or not consolidating your debts will help your score, who can say. Logically, you would think so, but FICO isn't always easy to predict. If you can refrain from applying for additional credit, and if you can make a dent in your balances, your score is certain to increase. hehehe I would put money on that.

    Good luck.


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