Loan to Pay Off Debts. Low Credit Score.

**Bob B.** · 10-29-2014, 08:15 AM

Originally posted by dphet View Post

I am looking to pay off my debt of $20,704.63. It consist of my student loan, medical bill and timeshare. I hope to get a loan so I can lower the interest rate, and pay it off so I could avoid the maintenance fees. My credit wasn't the greatest in the past but I worked my way up by a little to 602.

I tried applying for a loan at my Credit Union bank but was recently denied. So my question is, how much can I be qualified for? Or how can I get this loan with my current credit score? I am trying to find answers to help me get to a better future and start saving and get on good standing with my credit.

I am open to any type of advice to help me get out of this debt. Thank you!

My best advice to you is to keep plugging away as you are, paying as much as you can toward the highest interest rate debt each month, and make minimum payments on the other debts.

Stop, at least for now, applying for a consolidation loan. Each time you do apply, you put a small ding in your credit score. Keep going as you are until you've added another 100 points to your credit score, that is until your credit score is +700.

Right now you are perceived on paper as a high credit risk because of the low credit score. Keep at it for now, and evaluate later.

**dphet** · 10-29-2014, 09:37 AM

Originally posted by Bob B. View Post

My best advice to you is to keep plugging away as you are, paying as much as you can toward the highest interest rate debt each month, and make minimum payments on the other debts.

Stop, at least for now, applying for a consolidation loan. Each time you do apply, you put a small ding in your credit score. Keep going as you are until you've added another 100 points to your credit score, that is until your credit score is +700.

Right now you are perceived on paper as a high credit risk because of the low credit score. Keep at it for now, and evaluate later.

Thank you. This is a great advice. I just found out about snowballing and I'm just going to do just that.

**Petunia 100** · 10-29-2014, 02:13 PM

Have you tried to sell the timeshare?

**bjl584** · 10-30-2014, 06:34 AM

Originally posted by dphet View Post

I am looking to pay off my debt of $20,704.63. It consist of my student loan, medical bill and timeshare. I hope to get a loan so I can lower the interest rate, and pay it off so I could avoid the maintenance fees. My credit wasn't the greatest in the past but I worked my way up by a little to 602.

I tried applying for a loan at my Credit Union bank but was recently denied. So my question is, how much can I be qualified for? Or how can I get this loan with my current credit score? I am trying to find answers to help me get to a better future and start saving and get on good standing with my credit.

I am open to any type of advice to help me get out of this debt. Thank you!

You can't finance your way out of debt.

I would forget the idea of trying to get a loan to pay off other loans. That really doesn't fix the problem. I'd sell whatever you can, boost income, and cut spending. Then just keep chipping away till the debt is gone.

**dphet** · 10-30-2014, 07:22 AM

Originally posted by Petunia 100 View Post

Have you tried to sell the timeshare?

I can't exactly sell the timeshare unless it's paid off in full. So, that was one reason why I wanted to get a loan to pay it off so I could sell it.

**doingitallwrong** · 10-30-2014, 08:52 AM

What are your current interest rates? You could try for a peer-to-peer loan with Prosper or Lending Club, but with your credit score the interest rate will probably be in the high teens at least, if not the low twenties.

It is very true that you can't borrow your way out of debt, but restructuring debt can get you paid off faster and with less expense. (I used a Lending Club loan to pay off some high-interest credit cards. Even without paying any extra on the loan, it will save me three years in payments and $12,000 in interest.) You have to be dedicated to not running up additional debt, though, and that's where most people get into trouble.

**dphet** · 10-30-2014, 12:45 PM

Originally posted by doingitallwrong View Post

What are your current interest rates? You could try for a peer-to-peer loan with Prosper or Lending Club, but with your credit score the interest rate will probably be in the high teens at least, if not the low twenties.

It is very true that you can't borrow your way out of debt, but restructuring debt can get you paid off faster and with less expense. (I used a Lending Club loan to pay off some high-interest credit cards. Even without paying any extra on the loan, it will save me three years in payments and $12,000 in interest.) You have to be dedicated to not running up additional debt, though, and that's where most people get into trouble.

The interest rate is currently 17%. I will look into the lending club. I'm currently snowballing my way out of it and could possibly pay it off within 4 years, if I continue it that way. Thanks for the tip.

**mortgagereport** · 11-15-2014, 10:54 AM

Debt consolidation is a common reason to get a loan, but in the end it is only a very small step. By far the most important thing is to be very disciplined and make payments diligently. Your best bet is to cut back on all unnecessary expenses and make extra payments toward the debt until it is gone.

Look at it this way: If you took out a 5-year loan at 15% interest, you will have to pay about $493 a month. If you could manage to consolidate those debts down in a 10%-APR loan (very unlikely given your credit score), you would bring your monthly payment down to $440, saving $53 a month. On the other hand, with that same 15% loan, if you put that same $53 back toward the principal, you'd pay off the loan 8 months sooner. If you could pay an extra $100 a month, you'd pay it off more than 13 months early.

Debt consolidation and extra payments can both help to ease the financial burden of a loan, but discipline and commitment to wiping it from your balance sheets is the most important piece of the puzzle.

**snafu** · 11-15-2014, 04:14 PM

I see it the same way as mortgage report outlined. If you roll over a SL you lose any tax rebate on fees and interest. I'm guessing that interest added to the debt is vicious. It's truly in your best interest to develop a budget, temporarily cutting unnecessary expenses to get out from under of all that debt as quickly as possible. Can you get everyone aboard for this challenge?

I hope you understand that most people find it incredibly difficult to get rid of a time share.

**JohnM.Hendricks** · 11-20-2014, 01:30 AM

If you want a low interest debt consolidation loan then you can visit "lendingclub.com/public/debt-consolidation-loans.action", if you are unable to get because of bad credit you can choose one of these options.
Use a Home Equity Line of Credit
pply to Credit
Get a Peer to Peer Loan
Take a Loan from Family or Friends
Appeal to a Co-Signer

Loan to Pay Off Debts. Low Credit Score.