- If you are looking to get out of credit card debt.
It is almost always better to consolidate debt into a personal loan where there is a fixed term instead of a revolving plan.
- If you are trying to improve your credit score.
If you have a ‘low available’ revolving limit on your credit report, you many consider a personal loan for debt consolidation rather than transferring balances to a credit card. This strategy enables you to leave credit cards open (but paid), while improving your capacity or availability. This factor can boost your score.” (Note: How much you owe and strong availability on your revolving limit(s) comprises 30 percent of your credit score.)
- If you have had issues with high balance credit cards in the past.
If you have a history of incurring higher credit card balances, it may be wiser to consider a personal loan. Hence, you remove the temptation to keep borrowing on a revolving line.
- If the interest rate is lower than a credit card, saving you money.
Usually, interest rates for personal loans are based on your credit score. If you have good credit, you could get a lower rate than a credit card. Conversely, credit card rates are not typically based on credit score, but instead have a flat or variable rate. Personal loans at many institutions, including ECCU, offer a fixed interest rate.
Wondering what else you can do to improve your credit score?
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