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GeekGrad

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Personal Loan and Credit Score
I'm considering getting a personal loan to help with some expenses. I would pay off some collections on my account (they are some medical bills from about 4 years ago as I turned 18) and help with some expenses to help me get started in a career. I'm curious as to how this would affect my credit score long term. Any help would be appreciated!

Info:
CK score: 644
PL amount:1-2K

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The personal loan will have a positive impact in the long term, as any account in good standing will. In the short term, there could be some blowback because of average age of credit, hard inquiries and the fact that you have taken on more debt. Any immediate drop in your score would be eventually marginalized by the long term benefits of the additional account as long as it is in good standing. 

If the accounts you are paying off are only 4 years old, then they could still be on your report for another 3 years even if you paid them off. Any derogatory remarks would remain even if the accounts are moved to Paid in full status.

In summation, I would say that the loan is a positive net gain for your credit IF paying it off on time doesn't overextend you and cause you to run up utilization or even worse, cause a missed payment somewhere.

Reply by
GeekGrad

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Thanks! I can definitely afford to take the loan. It would just be helpful to have a quick infusion of cash at the moment. Although, I don't think I'll do it right now because the best loan companies all don't allow you to take one if you have unpaid collections on your account.

I noticed that and hoped to get a "pay-for-delete" agreement because I do hope to be able to afford a home before that 3 years is up. Otherwise, I was just planning on not paying them and letting them expire. I do not even think they know where I live because I have not received any communication from them at all, and only knew about them when I opened my account here. I don't want to do that because I try to be an honest person and pay my debts, but if they won't work with me, that's their loss.

To be honest, I don't know how they're on there. I recognize what they are for, but I was under the impression that my father had signed everything to be responsible for them (I was only 18 for a month or two when this happened) and never got any bill for them (though, I could have just never seen one as I was off at college).

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