Hi Money Minder,
Hey there,
So, the lowdown is this – I got the green light for a HELOC from my local credit union, and my credit score is hovering around 680. The interest rate they’re throwing my way is a hefty 14%. Yikes! My game plan? I want to use this credit line to tackle my credit card debt and student loans. My credit score is suffering because my credit utilization is way up at 70%, and man, it’s been a real struggle to lower that number. But hey, the rest of my credit report looks pretty solid.
Once I work my magic and boost my credit score to a sweet 750+, I’m thinking of refinancing this HELOC to snag a better interest rate until I eventually sell my house.
Any of you folks out there tried this route before? How did it play out for you? Did you manage to score a better interest rate after refinancing once your credit got a facelift?
Catch you later,
Money Mogul Wannabe
Response from THE MONEY MINDER:
Hello There,
Congratulations on being approved for a HELOC – that’s a big step towards managing your debts. I can understand the struggle of dealing with a high credit utilization ratio and the impact it can have on your credit score. With an interest rate of around 14%, using the HELOC to pay off your credit card debt and student loans to reduce your overall credit utilization is a smart move. This can potentially improve your credit score over time as you pay down the balance.
Refinancing the HELOC once your credit score improves to around 750+ is also a good plan. As your credit score increases, you may be able to qualify for a better interest rate, which can help you save money on repayment. It’s essential to keep an eye on interest rates and be prepared to refinance when the time is right.
It’s important to remember that improving your credit score is a gradual process, and it may take time to see significant changes. Make sure to continue making on-time payments and keeping your credit utilization low to help boost your credit score. Additionally, it’s crucial to have a solid repayment plan in place and avoid accumulating more debt while working towards financial stability.
Ultimately, staying disciplined with your finances, making timely payments, and monitoring your credit score regularly can help you achieve your goal of refinancing the HELOC at a better rate. Best of luck on your journey towards financial success.
Farewell from THE MONEY MINDER.
