New loan impact on FICO score? (pay, rate, transfer, credit)
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I am thinking about taking out a personal loan from my credit union to pay off about $4000 in credit card debt, the reason being that the loan rate is a lesser percentage than the credit card rates.
However, I'm also looking to buy a condo this year and don't want to mess up my credit score by taking on "new debt", even though it would just be a transfer of the existing debt. I've got a pre-approval from a bank based on my income and credit score. At the same time I am trying to save for the down payment for a 3.5% FHA mortgage.
I've been knocking down my credit card debt over the past six months, but the rates are so high--two of the cards' rates are in the 20+% range. I hate paying all that interest. I've asked them to lower the rates, but one said "not at this time" and the other didn't lower my rate but turned around and raised my limit by $4000.
I am not using the credit cards and the goal is to be cc-debt free.
So how badly would this move affect my credit score and a mortgage approval?
You could go to the credit simulator on creditkarma.com and enter in what you plan to do. It will give you an estimate of your new credit score with the change.
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