[klschw70]

Does a Debt Consolidation Loan hurt your credit if you close the accounts and pay just a loan to a bank?

[kp2171]

have you considered keeping one of the oldest accounts and not using it? Having a line of credit isn't necessarily a bad thing, especially one that is established.

I'm not an expert in this area and there are others here who will correct my mistakes. If anything, my posting will bump your post up again so other will catch it...

I know your debt to credit limit ratio is important... that is, lets say you have three cards card #1: 500 debt/ 1000 limit, #2: 750 debt/ 1000 limit, #3: 650 debt/ 1500 and then you transfer them to a no balance card to get 1900 debt/ 2200 limit and cancel the other cards. You may not necessarily be in a much better place concerning your credit right away because your debt to credit ratio in the first case was 54% where in the second case its 86% and you have just started a new account.

don't know if its an option for you, and its one that probably isn't the best idea concerning investments, but we used a 401k loan to consolidate debt. It didn't hurt our credit score, since it's a loan to ourselves. The bad side is it took money out of long term investments, which is simply bad since compounding is the key long term... but for us it was more of a mental need and I'm glad we did it... so if that is an option for you maybe it'll work.

as for whether the bank loan will hurt your credit... its just moving debt around... I'm not sure how much it'll hurt... the biggest issue id have is make sure you can pay and be one schedule no matter what... if you use your home as collateral and you default, you can be in some serious pain.

on the other side, itd be a lot better than going through a debt consolidation program.

now ill step aside so the experts can speak the truth. =)

[posheak]

DEPENDS ON THE ORDER YOU DO THINGS. Sorry about the caps lock. You get the loan and pay off all your outstanding debt. I would then close the accounts after you pay them all off. I would however keep one credit card active, however never charge anything on it that you can not pay off in one pay cycle. If you do it in this order then you will help you credit in several ways. You show a low debt to income ratio. You show you can and are willing to pay your debts. Also never skip a payment. If you are short that month call the credit card company and they will work with you. What they are looking for is a willingness to pay off the debt.
As for the debt consolidation loan, if you can set up an automatic payment to the bank you may get a better loan rate too. I wish you luck.

[posheak]

So what's up, did you actually closed your accounts?

[klschw70]

so whats up, did you actually closed your accounts?

No. I haven't done anything yet. I am probably going to take a loan against my 401k and be debt free. Close my accounts except for 1 and go from there. I thank you for your input!:D

[posheak]

All the best, I know you'll get through this

Have a safe day