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rosa0214

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How to handle 3 credit cards
I have one credit card that I can pay in full each month and use for purchases, the other two I can only pay minimum on each. Are my chances good for a better credit score and more importantly, to apply for a personal loan? I'd like to achieve this by December 2015.

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Consider a balance transfer card

The best way to utilize credit cards is to use them for purchases you would normally make each month (necessities) and to pay them in full each billing cycle. This keeps you from having to pay interest on your purchases. It's great that you are able to pay the one card in full every month. Is there any way to temporarily set aside this card and focus on making larger payments on your other two cards each month? If not, your goal is to pay off those two cards as soon as possible while paying the least amount of interest you possibly can. A personal loan could be a good option ONLY if it is a legitimate personal loan from a trusted bank or source with a reasonable interest rate. You do not want to take out a loan from any cash advance or title loan place as their interest rates are likely way higher than the interest on your credit cards which may make things worse in your situation. A personal loan is a good way to diversify the types of credit on your credit report, which is considered a good thing. Having a personal loan reporting positively in addition to having credit cards, auto loans or mortgages is good as long as they are all being paid on time. This diversity in your types of credit indicates that you are a trustworthy borrower. If your credit score is considered Fair or better, you could also consider shopping for "balance transfer" cards which are geared towards your exact situation. They would transfer the balances from your two cards to the balance transfer card so that you can simplify things by only having to make one payment each month. There is a small "transfer fee" on most balance transfer cards, generally around 3%, so $30 for every $1000 you are transferring. A lot of them will also have introductory, no interest specials for new card holders so you may be able to transfer the balances from both of your cards, only paying 3% for the total amount transferred with no interest for 6, 9, 12 or 18 months for some cards. This route will definitely get you through December, giving you the chance to actually pay down what you owe rather than most of your payment going towards interest rates (which is the case when you are only able to make minimum payments each month, unfortunately). I should also mention that if you go the balance transfer card route, you want to be sure that you do not max out the balance transfer card by transferring the balances from the other two cards. This would raise your credit utilization and cause your score to go down. So if your two cards are carrying a total balance of, let's say $1500, you would hope to get a card with a balance of $4,000 or more so that your utlization would be no higher than 37%. (Ideal utilization is below 15% but I would go absolutely no higher than 40% and only if you really had to.) Hope this helps!

-Taylor

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