Should I Get A Debt Consolidation Loan In The Meantime
Q: I'm in grad school and I have 5 years before I settle down and buy a house. Let's just say I've made some bad financial decisions in the past so I need to get my 617 FICO score up as high as possible in this 5 year period. My credit report shows one 30 day late period. It's been paid off, but that card was canceled by the company (so that won't vanish for 7 years), so not much I can do about that. I have three credit cards more or less maxed out to ~4000. Two of the interest rates recently skyrocketed to ~30%!. I'm in the process of calling the companies to find out why, unless someone here knows why. I'm using my student loans (~6% interest v.s. 12 - 30%) to pay off these high interest rate credit cards. The problem is that I receive about $3000 quaterly, so this puts me a year away from converting my credit card debt to student loan debt. Am I going about this in the right way? Should I get a debt consolidation loan in the meantime? Should I get a debt reduction service to help me out?
A: It sounds like you are in a bit of a tough spot. You have to get the money off those high rate credit cards immediately. Take a few days off from your other obligations and devote them to working the phones, etc. to find some debt consolidation loan with a lower rate. However, before you sign up for anything read every last little bit of fine print. Your current cards had something in the fine print that allowed these rate hikes, but you apparently didn't know about it. You may want to also step back and take a look at the big picture: where you realistically expect to be financially over the next five years. Make a budget for each of the next