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MGB32

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Trying to improve score for future mortgage application. Is personal loan to pay down CCs a bad idea
My biggest issue with my credit score is my CC utilization ratio. I have a lot of CCs that are in the 60-90% usage area. I know - not good, but it got me through college and I have a good job now and am working on paying them off. My husband and I are hoping to buy a house in about 6 months. What's the best way to sort out this utilization ratio, given this info? Should I just keep slowly plugging away at paying them off or apply for a personal loan (like through Prosper or LendingClub) to consolidate and get them paid down to a least 10%? I know a new loan will hurt my score at first, but how long will it take to recover, especially considering that my CCs will be almost completely paid off?

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Best bet is to pay them down to 10% usage or below (at least - try to pay the down to less than 5%). 

If you can do that in six months, you should be good to go depending on the score you have now (because it will go way up). Otherwise, your only real hope would be to:

1) have a credit score of at least 620 (640 for manufactured homes) now, and...

2) in addition to #1, go for an FHA or VA loan with the lender (those two loan types usually allow a mortgage with the above scores or better, as long as your debt/income ratio for the mortgage payment is good.)

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Try a balance transfer instead of a loan.  With a good balance transfer, you pay 0% interest for 12 orr more months, which gives you a lot of savings on interest until they are paid in full.  If you were to take out a loan, you are paying interest on the entire term of the loan.  How about waiting on the house until you get the cards well paid down and aren't carrying such a high debt load? And absolutley do not  close the cards!!!  Home ownership isn't that cheap because you have to figure in property taxes, homeowner's insurance with a good liabililty coverage, repair and/or replacement of appliances and of damage that is not covered by insurance.  I recently had a dishwasher spring a major leak which meant calling in a plumber on a Saturday (double the average rate and is not covered) and I had to buy a new built-in dishwasher which is more expensive than a portable.  So far, that is nearly $1000 and there is the inconvenience of the time it takes to get the repairs done. Renting isn't so bad.

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I think we all agree that the cards need to be paid down, the question is what's the best way to do so - directly or to consolidate with a loan? What looks better to a loan officer? My credit score is good, as is my husband's so that's not an issue. We know about home ownership. We already own an investment property but cannot live there due to the distance from work (we used to live there but we moved because we got good jobs out of the area). That property has solid tenants and provides a nice monthly income that pays for the mortgage and then some. Plus our jobs, we're not doing bad financially, but with another baby on the way, we won't be able to stay in our current rental, which is why we would like to buy our "forever" home before the baby comes. 

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