Will it hurt my credit rating if I pay off my car & student loans with a lower interest rate credit card?
Answer:
In terms of your credit scores, it might ding them a bit because the FICO formula takes into account your 'mix of credit' in addition to debt, payment history, etc. Student loans count as installment loans (which means that you make fixed regular scheduled payments on it), while credit cards are revolving lines (you use them as you please and pay according to the agreement). Installment lines do not have as much of an impact on your credit scores unless they are paid late or are in default. A mix of different types of credit helps your scores. Having alot of revolving debt hurts your scores more than alot of installment debt.
I think that your scores are not that important unless you are buying a something within the next few years that requires your credit to be pulled, and you can't pay the debt off before the purchase . If you get a fixed low rate for the life of the transferred balance on the CC you want to transfer to (and you're not buying anything that major), you might save some money by consolidating it to one CC. Just don't use the CC that you transfer to for purchases.
It really depends on the details of your situation as to whether its a good idea.
Umm, I would really doubt that you have a credit card with a lower interest rate that your car and student loan.unless it's an introductory, come-on, short-term rate. Read the fine print on the card. That "low" rate might only be for a couple months and then jump to 18%, 21% or even higher. Be careful!
Your kidding right? A student loan is anywhere from 3 to 7%. A car loan in the neighborhood of 7-13%. A credit card (after the wonderful "Introductory offer" is 19-23%.
Since no one cares if you bought a college education as opposed to pink Capri pants (well we do), the only thing that matters is if you pay it off on time.
You obviously are paying your student loan off before you completed your education or you went to a match cover university that taught you very little.
I doubt it will hurt your credit unless you start missing payments and a lower interest rate on a card? I doubt it. People take out student loans because they have muhc lower interest rate.
If your credit card is able to handle the load of both of those loans, then perhaps, you need to ask your bank or credit union for a personal loan that pays off the other two loans. Keep the credit card at home, so temptation does not ruin your credit.
Doing that shows you paid off your student loans and your car early. THAT establishes a good mark for your credit rating. Be careful of extending the pay off dates and costing you a lot more money in the end. In fact, make sure any loan for this purpose has an interest rate equal to or lower than what you already pay. Otherwise, leave things as they are now.
Good luck!
Will D
Enterprise AL
http://www.notagz.com
It will say settled or paid in full on the student loand and car.
It will obviously be a bigger balance outstanding on your credit card and it will state if you are paying the credit card off monthly on time
It will just make your credit rating alot better as you have paid off accounts in full. Sometimes the credit file wants you to have more accounts outstanding ironically! Its a vicious circle!
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You should only use 1/3 of your available balance on your credit card. If you want to pay off loans early, try making a bit of a larger payment on each, but be sure that this doesn't cause you any penalties for paying off early.
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