Taking a loan to pay Credit debt? Affect on credit score?

**siggy_freud** · 06-02-2013, 05:03 PM

Would you be using the loan to pay off credit cards only, or for part of your start-up costs? For the CC's I'd be looking at opening a 0% APR for 12-month type of card and transfer the debt over. Then I'd pay it off in the 12 months.

**joshuaak** · 06-02-2013, 05:07 PM

Originally posted by siggy_freud View Post

Would you be using the loan to pay off credit cards only, or for part of your start-up costs? For the CC's I'd be looking at opening a 0% APR for 12-month type of card and transfer the debt over. Then I'd pay it off in the 12 months.

@siggy - I'd use about 5k for the start up cost and the rest to make a dent in my credit card debt. I've looked into 0% balance transfers but the credit limits have been low on those cards (1600-2k) and wouldn't make that much of a dent in the debt .

**disneysteve** · 06-02-2013, 06:02 PM

Congrats on finishing the long road to being a doctor. I'm a doc myself.

I've accumulated around $22k of credit card debt at very good rates, avg of 14% APR

Can I just say that this statement bothers me. You say your CC debt is at "very good rates" but then say you're paying 14%. That is not at all a good rate and certainly needs to be at the top of your list once the money starts coming in.

The most important thing of all is for you not to adopt the "doctor lifestyle" until you clean up the debt mess you've accumulated. Do you know how much you will be making as your starting salary? What are your current monthly expenses?

I would urge you to keep your expenses as low as you possibly can and focus every spare cent on the credit card debts first and then the student loans after that. However, also set aside money for an emergency fund so that something like a $5,000 expense doesn't cause you to search for ways to borrow money.

Should you get the 15K personal loan? I'd say no. Take out the minimum that you can to cover the immediate needs only. Yes I know the rate is lower than on the CCs but you aren't going to keep that debt long anyway. You can't borrow your way out of debt and dropping the rate from 14 to 7 on 10K isn't going to make that much difference over a short time period anyway.

Live lean. Be as frugal as possible. Knock out the CCs over the next few months and then focus full force on the student loans. 300K is going to weigh you down for quite a while but don't make it any longer than it needs to be.

**bjl584** · 06-03-2013, 03:30 AM

My initial reaction before even reading your post is that you can't finance your way out of debt.

I think I'd be more inclined to try to find a card that offers 0% and do a balance transfer.

**Jerry91** · 06-04-2013, 09:15 PM

I don�t think it will be a good option to take out a personal loan in order to pay off credit card debts. It will be just replacing one loan with another. Rather, you can take steps to settle or consolidate the debts and pay them off.

**coreyclark315** · 06-04-2013, 10:56 PM

Taking a loan to pay Credit debt? Affect on credit score?

First of all it depends on the amount of interest you are paying on your credit card debt. If you have a good payment history earlier and now dealing with problems, then it�s better to ask the credit card companies for a lower rate.
If you are opting for a personal loan to pay off the credit cards, don't let the new balances tempt you. Clearing the previous debt doesn't give you an excuse to start building a new balance. Commit yourself to paying the entire balance each month. Otherwise it's better to leave the option of taking a personal loan

**annibe11e** · 09-26-2013, 10:20 AM

Borrow what you need for start up costs.

Negotiate the rate on your credit card debt, if possible.

Build an EF.

Pay down CCs.

Pay down SLs.

Profit!!!

As far as your credit is concerned, new debt will bring your score down, while paying down the credit cards and increasing available balance will bring it up. I don't think the effect on your credit would be substantial either way.

**TheKayla** · 09-26-2013, 10:33 AM

If you have that much in CC to begin with, no matter how long it took you to build up, you shouldn't be solving your debt problem with another form of debt. You need to learn to live more frugally and within your means. There's a deeper problem than just a mathematical one. 14% is a horrible rate, you can't compare a bad rate to a really bad rate like 22% and call it a good rate.

I apologize for being blunt, I usually don't like to give advice in this way. It just seems like there's a deeper rooted problem and I'd really like to help in any way I can. I suggest you create a realistic budget and just begin saving and knocking down your credit cards as much as possible, even in your current situation with less income. When you do start getting paid more, keep up the frugal lifestyle until you can knock off your CC debt and a large chunk of your student loans. If you absolutely must take out money to get your career started, then do so-- but I'd suggest selling something/borrowing from relatives or friends/ or anything else you can do to get that for right now interest free, and pay it back right when you get your first paychecks. Can you hold off until you have that $5000 saved up on your current income so you don't have to take on more debt?

Taking a loan to pay Credit debt? Affect on credit score?