Washington, DC · Member since 2018 · 17 posts · 0 votes
I have about 35K in debt. My credit utilization is 48%. I have a personal loan with an original value of 14K that I'm three months from paying off. Was that personal Loan calculated in my Credit utilization. When it closes how do you think it will effect my score. 759 Equifax , 763 transunion ,
@Carroll Lee first of congrats on your credit score. Its very good. If you personal loan was reported and show up on your credit report I think when you pay it off your score may rise a little. Not anything substantially.
@Carroll Lee In all likelihood, if you took a personal loan from an individual (family, friends, colleagues), then it would not be reported. You can verify this information by getting a copy of your credit report.
@Carroll Lee In all likelihood, if you took a personal loan from an individual (family, friends, colleagues), then it would not be reported. You can verify this information by getting a copy of your credit report.
I believe when you pay it off it’ll actually dip slightly as the average age of your credit accounts will now be less. I’m prettt sure this is temporary
@Carroll Lee You should pay off the loan but keep the credit line open. This will (A) decrease your credit utilization and (B) should make your credit score go up over a period of time.
@Carroll Lee No one here can tell you with certainty how it will affect your score. One thing you might try is to use an online credit score simulator to estimate what will happen.
There are sites (i.e. CreditKarma, NerdWallet, etc) that offer free credit score simulators using the information in your Trans Union credit report to estimate how various transactions might affect your score. That should give you a rough idea.
Also, your credit score is already good but it sounds like you’re interested in improving it. So I'd suggest trying to lower your credit utilization ratio. 48% is pretty high and is almost certainly lowering your score some.
Credit utilization has a "high" impact on your credit score. Let me give you some anecdotal evidence of how much it can affect your score. My credit utilization ratio usually is around 5% and my credit score always hovers around 827. However, a couple months ago, I charged a very expensive vacation on my credit card because I wanted the rewards points. I paid the entire balance off as soon as I got the statement; however, as soon as the higher balance hit my credit report and my credit utilization ratio went up to closer to 20%, my score immediately dropped over 30 points to 795. So it can have a very big impact on your score. The good news is, as soon as I paid the balance off and that hit my credit report, I went right back up to 827.
I'd suggest following this guideline and trying to get your credit utilization ratio as low as possible:
Thanks I will check out those sites. The personal loan was @ 14.5% so at least 90 of each months payment was going down the drain in interest. I can snowball the who $280 into the rest of the debts.