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Considering a loan to pay off debt, need advice

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Considering a loan to pay off debt, need advice

Old 11-08-05, 05:32 PM
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Considering a loan to pay off debt, need advice

So the wife and I have about $8,000 in credit card debt to pay off. Some of them are ridiculous with the finance charges, and it seems we aren't getting anywhere.

For example, one card has a $1400 balance, and the minimum payment is about $38, but the finance charges are $25.

The debt isn't from lavishly spending or blowing it on games, DVD's, etc. It's from her past before I met her. She basically lived on a couple of the cards and used some to pay for college, misc living expenses. Maybe $2,000 of the $8,000 is from buying her computer, and a few shopping trips for clothes and household items and such.

So I get a thing in the mail from GE about a line of credit. I'm pre-qualified already (so it says). I figure it's a loan, so I can use it to pay off the credit cards. 5 minutes into the call, I get the "Unfortunately, we cannot approve you at this time" speech. So much for being pre-qualified. I then try E-Loan. No sale there, either.

She's wanting to avoid consolidation for the simple fact that she's been burned before by a company that went out of business and ripped her off to the tune of $500. Also, she doesn't want the credit hit. If there is a reliable place, we might consider it, though.

So am I out of luck for the loan thing? The way things are going, it'd take us 20 years to pay off the cards.

I can't cancel the cell phone because we both depend on it for our jobs. We're paying the cheapest rate possible ($29) for internet and cable. I need the internet for my job also. We don't eat out, if I buy a game/DVD it's with credit I have at stores from trading in other games/DVD's, so we're not blowing money. We're slowly building up a savings account with ING Direct also.

Any suggestions are welcome.
Old 11-08-05, 05:38 PM
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If you have good credit you can get a personal loan through the likes of Capital One, etc.
Old 11-08-05, 05:42 PM
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Well considering E-Loan and GE turned us down, maybe our credit isn't that great.
Old 11-08-05, 05:55 PM
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Get a free copy of your credit report at www.annualcreditreport.com. This is the site which was set up by the US government following the recent passage of the law giving you the right to a free credit report every year. It might be worth it to pay the few bucks to find out your credit score as well, since this is what most would-be lenders are going to look at. The higher, the better.
Old 11-08-05, 06:11 PM
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Citibank credit card with 0% balance transfer (no fee) for 12 months?
https://www.accountonline.com/ACQ/Ch...EYS=4T4Z5F04-M

Discover card - 0% Balance transfer for life as long as you make 2 purchases a month (best strategy -- buy 2 separate gas transactions/packs of gum/ebay fee payments/etc each month)
1-800-347-0320 - Invitation #FMBB
Old 11-08-05, 06:51 PM
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Originally Posted by Numanoid
Get a free copy of your credit report at www.annualcreditreport.com. This is the site which was set up by the US government following the recent passage of the law giving you the right to a free credit report every year. It might be worth it to pay the few bucks to find out your credit score as well, since this is what most would-be lenders are going to look at. The higher, the better.
I got a recent copy of my credit report. For the most part it's good, just a couple of bad marks from when I was younger.

My credit score is under 650.
Old 11-08-05, 06:53 PM
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Originally Posted by Darq
Citibank credit card with 0% balance transfer (no fee) for 12 months?
https://www.accountonline.com/ACQ/Ch...EYS=4T4Z5F04-M

Discover card - 0% Balance transfer for life as long as you make 2 purchases a month (best strategy -- buy 2 separate gas transactions/packs of gum/ebay fee payments/etc each month)
1-800-347-0320 - Invitation #FMBB
I'd go and apply for those, but the more inquiries, the lower your FICO score goes, right? I'd most likely get denied anyway. I think my Best Buy card was the only card I ever applied for and gotten approved for without getting a "pre-approved" letter in the mail.
Old 11-08-05, 07:15 PM
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Originally Posted by nickdawgy
I got a recent copy of my credit report. For the most part it's good, just a couple of bad marks from when I was younger.

My credit score is under 650.
That's not so good.
Old 11-08-05, 07:26 PM
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Originally Posted by nickdawgy
She's wanting to avoid consolidation for the simple fact that she's been burned before by a company that went out of business and ripped her off to the tune of $500. Also, she doesn't want the credit hit. If there is a reliable place, we might consider it, though. Any suggestions are welcome.
No such thing as a credit hit. I would check with your local bank or credit union.

Another idea is to find out what it takes to make double your payments on the card and take that off of your living expenses. To rest assured you're succesful cut or hide the cards, and pay cash for everything. Much easier to budget when you can see the budget in your wallet.

I'm doing something very similar right now because way too often I buy expensive things with cash that should be earmarked for other stuff. Fifty here, $200 there, $80 there, it adds up pretty quick.

Basically, at the start of the week, give yourself $X, whether it's $200 or $500 or whatever. And that is IT for the money you have. Everything except the mortgage/rent and utilities is paid through this cash. It'll force you to make choices on what you want to do.

Another option is to find a side job neither of you would mind doing that you could do on weekends. Then them money you make from that goes straight to these bills as an "extra" payment.

Before you do anything else, make sure your credit card is at the lowest possible rate. Here is a good place to look: http://www.fatwallet.com/c/52/
Old 11-08-05, 07:28 PM
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Originally Posted by nickdawgy
I got a recent copy of my credit report. For the most part it's good, just a couple of bad marks from when I was younger.

My credit score is under 650.
Why is it low? High balances? Late payments? "Bad marks" seems to be late payments and/or collection accounts. If it's high balances, do your best to pay one of your accounts down (say the $1400 one) and then ask for a lower rate. Always always ask for a lower rate.
Old 11-08-05, 07:28 PM
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Originally Posted by Deftones
That's not so good.
nick: How much under 650 is it? 645 isn't terrible. 619 is fair, and anything under 600 is poor.
Old 11-08-05, 08:33 PM
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If you do get a loan, make sure to cut up the credit cards and don't use them again. We had a pretty good amount of credit card debt at one time and got a 5 year loan to pay off all that was owed. We paid the loan off in 3 years. However, if you keep the cards and only use them occassionally, not only will you be paying off the loan on the original debt, but the debt on the cards as well. You have to be disciplined.....

Check with local banks, particularly credit unions or the bank that you have your savings/checkng account with.
Old 11-08-05, 08:39 PM
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Originally Posted by Deftones
That's not so good.
Well I suppose it's not bad either. I have like 7 credit cards and hardly any of them have a balance.
Old 11-08-05, 08:43 PM
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Originally Posted by The Bus
nick: How much under 650 is it? 645 isn't terrible. 619 is fair, and anything under 600 is poor.
It was 650+ and then it went down to about 625+ I guess because of inquiries maybe? The two bad marks are from 1999-2000 when I didn't have health insurance and had to have some medical work done. I guess the county didn't want to pay for it, so they billed me.

Other then that, on my 7 cards I have never been late and paid more then the minimum payment 95% of the time. The rest of the time I paid the minimum.
Old 11-08-05, 08:45 PM
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Originally Posted by Shadow Ace
If you do get a loan, make sure to cut up the credit cards and don't use them again. We had a pretty good amount of credit card debt at one time and got a 5 year loan to pay off all that was owed. We paid the loan off in 3 years. However, if you keep the cards and only use them occassionally, not only will you be paying off the loan on the original debt, but the debt on the cards as well. You have to be disciplined.....

Check with local banks, particularly credit unions or the bank that you have your savings/checkng account with.
We keep the cards in a drawer at home. There has been no temptation to use them at all. I forgot they were there until I started this thread, so that tells you how we have lived without them.
Old 11-08-05, 08:47 PM
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Keep in mind my wifes debt is like 7k and mine is 1k. Her credit rating is lower then mine, but she makes more money then I do.

There has to be some way to get a loan. If we could get a 8k loan, we could pay off the cards, and then pay $300-$400 a month towards the loan. I'd rather do that then pay interest and finance charges for 10+ cards.
Old 11-08-05, 09:17 PM
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nick - it looks like you are trying to make progress and correct some of the financial mistakes.

$8K in debt seems like very little. If you really tried hard, I mean sacrificed everything, how long would it take you to just pay it all off?

I mean no eating out, no dvd's, no fun, no toys, no luxury, skimp and save, how many months would it really take to kill off the $8K?

It may just be worth it. Sounds like you are going to have to build a little more credit to get a good rate on a loan.

You mentioned savings in ING - IMO a waste of time if you have high interest debt. After inflation and taxes, you ING savings is actually losing money in real terms every day it would do you much much better to use it to pay off debt.

If you were that concerned about the debt, you shouldn't have bought a new car
Old 11-08-05, 10:00 PM
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Originally Posted by 4KRG
nick - it looks like you are trying to make progress and correct some of the financial mistakes.

$8K in debt seems like very little. If you really tried hard, I mean sacrificed everything, how long would it take you to just pay it all off?

I mean no eating out, no dvd's, no fun, no toys, no luxury, skimp and save, how many months would it really take to kill off the $8K?

It may just be worth it. Sounds like you are going to have to build a little more credit to get a good rate on a loan.

You mentioned savings in ING - IMO a waste of time if you have high interest debt. After inflation and taxes, you ING savings is actually losing money in real terms every day it would do you much much better to use it to pay off debt.

If you were that concerned about the debt, you shouldn't have bought a new car


We needed another car, and I consider it an investment of sorts since it'll last a long time.

Not sure how long it'd take, but we pretty much have cut out all the unecessary stuff as it is. I have even sold a bunch of games and DVD's on eBay to pay off some debt.
Old 11-08-05, 10:00 PM
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Originally Posted by nickdawgy
Well I suppose it's not bad either. I have like 7 credit cards and hardly any of them have a balance.
actually having 7 credit cards can also decrease your score.
Old 11-08-05, 10:00 PM
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Oh and as for the savings, if it was high enough, I'd gladly use it to pay off some cards. Unfortunately it's under 1k right now.
Old 11-08-05, 10:01 PM
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Originally Posted by superdeluxe
actually having 7 credit cards can also decrease your score.
But 7 cards with a combined available credit of say over $10k? With only $1k being used?

I was under the impression that getting cards and not using them is good. For example, I received a pre approved offer for a Home Depot card. Got approved for a $2,500 limit and to tell the truth, I might never use it. I've maybe shopped at Home Depot twice in my whole life. I only got it because I thought it'd help my score by showing the creditors that I have the means to spend but am disciplined enough not to.

Last edited by nickdawgy; 11-08-05 at 10:04 PM.
Old 11-08-05, 10:03 PM
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Originally Posted by nickdawgy
But 7 cards with a combined available credit of say over $10k? With only $1k being used?
Yes.

Credit companies like when you have more than 1..but they dont like when you have many cards, even if the balance is low. There was a reason, but I don't have the information in front of me.
Old 11-08-05, 10:04 PM
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Originally Posted by superdeluxe
Yes.

Credit companies like when you have more than 1..but they dont like when you have many cards, even if the balance is low. There was a reason, but I don't have the information in front of me.
So what should I do? Cancel some cards? Wouldn't that hurt my credit even more?
Old 11-08-05, 10:31 PM
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Originally Posted by nickdawgy
So what should I do? Cancel some cards? Wouldn't that hurt my credit even more?
cancel a few of the newer cards with no balance

dont cancel the ones you have had for a long time.. those are the ones that show good credit history.. recent cards dont help you, and could be hurting you
Old 11-08-05, 10:37 PM
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Figure out your debt-to-income ratio. take your all of your monthly debt payments and also include what your minimum monthly payment would be on your current credit cards with no balances and add that into your monthly debt. Then divide it by you and your wife's monthly income. Sometimes they deny you loans based on the DTI and credit score. If your credit is junk, a lower DTI will help; ie cancel a couple of credit credit cards to lower the DTI. Underwriters look at all your available credit when you apply for a loan. Shoot for under 40% DTI.

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