Is this a legitimate credit score strategy?

Hello, my credit score hovers between 690-710 so it's not horrible, but I did apply for the Chaes Slate last year and they gave me my credit score at the time (690) and said the reason for denial was due to my high credit utilization rate.

I can afford to pay down the debt without a personal loan, but it's always nice to avoid unnecessary interest.

RedCelicaGT said:   0% BT isn't really 0%. Most BT fees are 2-3%, which is more than you earn on your cash at a bank. Pay off as much of the card as you can with your savings, then you'll likely be approved for a new 0% card (which you may not even need).

a783783 said:   I can afford to pay down the debt without a personal loan, but it's always nice to avoid unnecessary interest. Which is why you pay down with your savings.

not necessarily true. I got BT from NFCU 0% and 0% fees. Most do charge BT fees and some dont.

And OP to answer your question, no your utilization wont be 0% it will be 100% if you get the consolidation loan because the credit limit will be $5000 and the amount you are using is 100%. But that will decrease as you pay down the loan

saavyfw said:   RedCelicaGT said:   0% BT isn't really 0%. Most BT fees are 2-3%, which is more than you earn on your cash at a bank. Pay off as much of the card as you can with your savings, then you'll likely be approved for a new 0% card (which you may not even need).

a783783 said:   I can afford to pay down the debt without a personal loan, but it's always nice to avoid unnecessary interest. Which is why you pay down with your savings.

not necessarily true. I got BT from NFCU 0% and 0% fees. Most do charge BT fees and some dont.

And OP to answer your question, no your utilization wont be 0% it will be 100% if you get the consolidation loan because the credit limit will be $5000 and the amount you are using is 100%. But that will decrease as you pay down the loan

No. Utilization is calculated off of revolving accounts.

saavyfw said:   

And OP to answer your question, no your utilization wont be 0% it will be 100% if you get the consolidation loan because the credit limit will be $5000 and the amount you are using is 100%. But that will decrease as you pay down the loan

the above is completely wrong. utilization ratio is the % of revolving credit utilized and has nothing to do with fixed payment loans.

OP you will take a ding for opening a new account, so your best strategy is to pay off all revolving credit lines with your cash and then do whatever you are going to do with your better fico score.

OP, best thing to do to decrease your utilization is to call your credit card and ask for a credit limit increase. Next, tell them you want to be aggressive with paying down the debt and ask if there is anything they can do to help you.

I've helped several individuals with this same process. In two instances, the credit card company was able to provide each individual with a temporary 3 month 0% APR plan to help pay down the debt. In another instance, the credit card company lowered the APR by a few points (2-3%) to help with the interest charges.

Opening another loan will lower your credit score by a few points for a hard inquiry, and will raise your utilization rate, since you will be using 100% of the loan to transfer your debt. As others have mentioned, there are very few truly free balance transfers these days. I think Discover card offers that sometimes, but usually you have to pay a 2-3% charge, minimum of $5 and maximum of a couple hundred to transfer a balance at 0%.

Increasing your credit limit will decrease your utilization. Lowering the APR if only temporary will help reduce the interest fees you are paying, and help get you motivated to pay off the debt yourself. Instead of transferring debt from one program to another, figure out what got you in the debt in the first place, then work to avoid it from happening again.

Good luck.

Revike said:   yOyOYoo said:   Opening another loan will lower your credit score by a few points for a hard inquiry, and will raise your utilization rate, since you will be using 100% of the loan to transfer your debt.
Again - utilization rate applies to revolving credit, not installment loans. Opening an installment loan has zero effect on utilization.

The problem with opening a loan is the interest that must be paid while waiting for a 0% BT may be nearly as much as the interest currently being paid. Reducing utilization by paying off the credit cards will raise the score, but there is still no guarantee that new BT applications will get approved. It's a roll of the dice. If there are a few unsuccessful attempts, the new inquiries will make approval increasingly difficult.

It's unclear whether the $5000 debt is spread over several CC accounts, and how quickly OP can pay down the CC balance with savings. That info affects which options are best. But if the balance can be paid off (or significantly paid down) with cash within a few months, that would be the way to go, IMHO ...

my mistake, learn something new every day! Thanks.