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Credit advice and loans.

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youngthibbs

Joined: 11 Sep 2008
youngthibbs's page
Posts: 1

93 Magic Points

Subject: Credit advice and loans.

Thu Sep 11, 2008 2:21 pm

I have an offer for a cash advance against my credit card limit at 4.99% until paid off. The card limit is $10,000 and I can get up to $13,000 advanced. I need about $10,000 for a student loan. Is it better to take the cash advance or apply for a student loan (I think I will get a rate between 5%-6%). My FICO is about 720. I am concerned if I take the advance my available credit to credit used will increase drastically and thus drop my credit score.

Thanks

fireyone

Joined: 26 Feb 2008
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Posts: 2843

1589 Magic Points

Thu Sep 11, 2008 4:31 pm

I am not sure how it will effect your score. There will be others that can tell you better than I can. What interest rate will you now paying on those student loans? You should be sure of the interest rate before making any commitments. Also be sure there isn't any fine print that you are over looking. You have a great credit score and you can maintain it by being credit wise.

Mary

Joined: 06 Jul 2006
Mary's page
Posts: 321

8636 Magic Points

Fri Sep 12, 2008 10:42 am

Hi youngthibbs
You can take a cash advance on your credit card upto $10,000 but this will affect your credit score adversely. This is because amounts owed contributes 30% in your credit score and if you take the entire credit limit available to you, your credit score may decrease. But if you take a student's loan, and repay the loan on time, your credit score would improve because of the good repayment history. So I think it is better to take a student's loan than going for a cash advance on your credit cards.
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carol

Joined: 27 Jun 2006
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Posts: 372

10224 Magic Points

Fri Sep 12, 2008 11:02 am

You are right Youngthibbs . As far as I know, your credit score may fall below 650 points if you take the entire credit limit available as cash advance. Moreover, credit cards should not be used for taking cash advance and should only be used for making payments by swiping. Cash advance against cards should only be taken in case of emergency. Moreover, as Mary said, if you take a Students loan with this credit score, and make payments on time, your credit score can even cross 780 points. So I think that you should go for student's loan than going for cash advance on your card.
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Carol

youngthibbs1
Guest

Fri Sep 12, 2008 6:07 pm

Thanks guys. I had a funny feeling about the cash advance. I will go with the student loan.

jtrenton

Joined: 12 Sep 2008
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Posts: 16

254 Magic Points

Fri Sep 12, 2008 7:08 pm

Getting a student loan is a much better choice.
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goodnatured

Joined: 03 Nov 2007
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Posts: 3133

5260 Magic Points

Sat Sep 13, 2008 2:24 am

Much better off that way.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!

markdeviz

Joined: 27 Aug 2008
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Posts: 13

597 Magic Points

Subject: credit score

Sat Sep 13, 2008 5:32 am

May be or not effect on credit score. I am not 100% sure your credit score will be effect.
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carol

Joined: 27 Jun 2006
carol's page
Posts: 372

10224 Magic Points

Sat Sep 13, 2008 10:14 am

Hi Markdeviz
Taking cash advance always affects your credit score. This is because if you take a cash advance on your card, your credit to debt ratio will decrease. Now since 30% of your credit score depends upon the amounts owed, your credit score may get reduced as a result of the cash advance you take on these cards. So you should not spend more than 30% of your available credit limit as it may hamper your credit score.
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Keep in touch
Carol

erb1953

Joined: 31 Dec 2007
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Posts: 631

8 Magic Points

Sat Sep 13, 2008 10:26 pm

Great advice carol.

goodnatured

Joined: 03 Nov 2007
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Posts: 3133

5260 Magic Points

Sun Sep 14, 2008 5:45 pm

I agree I think carol has said it all.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!

fireyone

Joined: 26 Feb 2008
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Posts: 2843

1589 Magic Points

Mon Sep 15, 2008 12:58 am

Wow Carol how are you so wise to all this? Do you work with these things? In any case thanks I just learned a few things I didn't know.

sdchargers_63

Joined: 13 Aug 2007
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Posts: 891

2654 Magic Points

Subject: cash advance

Tue Sep 16, 2008 11:16 am

I think taking a cash advance wouldn't be a good idea, either. A student loan gives you ALOT more 'flexibilty' if you start falling behind in payments. The way the economy is now, you shouldn't take an advance on ANYTHING.

fscorponline
Guest

Subject: I suggest taking the student loan route

Tue Sep 16, 2008 1:21 pm

If you max out you card or come close to it your going to drop your score dramatically. You should only have a 2 to 5% balance. I suggest the student loan route. It might take your score down a few points but nothing like a credit card will. 720 a good credit score must find ways that wont affect it.

Justin

Justin

Joined: 17 Jul 2006
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Posts: 412

10749 Magic Points

Fri Sep 19, 2008 9:35 am

Hi Fscorponline
Since amounts owed contributes to 30% in your credit score, the more you spend on your cards and come close to the credit limit, the lower will be your score. But if you opt for a student's loan, your credit score may fall due to the hard inquiry, but not as much as it would have been, if you maxed out your credit card limit. This is because new credit contributes only 10% in your credit score. Moreover, hard inquiry listing stays on your credit report only for two years, but if you fail to repay the credit card debt timely, it will reflect in your credit report for seven years.
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Best Wishes
Justin

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