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Posted in Paying Your Bills
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Question By
Xaalia

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Taking out personal loan, and using same money to pay off the loan...
So I am in the process of rebuilding my credit. This 26 year old mom made the same mistake many of you did at 18, but also had a parent who used my name to do their own charges and not pay them back, so yay me and my horrendous score (CK score of 575) I officially started my journey Thursday the 23 after reading many many many forum posts and success stories. I already have my Cap 1 Classic Platinum, and Cap 1 Scured on the way, and a Fingerhut (that I most likely won't use but once or twice....maybe =/). I was wondering, is it smart to take out a small personal loan, but instead of spending the money, I use the money the loan, so that all I am paying out of pocket is the interest. My plan was to take out a small personal loan, put that money in a seperate bank account, set-up automatic pay to the lender,and just put extra in the account for the interest plus enough to makesure it does not over draft at the end. I was wondering if that was a smart thing to do?

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Yes

Helpful to 1 out of 1 people

You are thinking correctly.  The personal loan will help.  It will show that you have a variety of credit types.

Reply by
Xaalia

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Thanks. I was just feeling/wondering if it was kind of wasteful, basically giving money away, you know? The loan was going to be small, like 250 or so, that way the interest rate wasn't going to be very high and I wasn't just throwing all of money at them just so I can rebuild my credut.

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I meant to say...

** Use the loan money to pay off the loan. That way all I am paying out of pocket is the intrest. I should proof read before hitting send!

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