Aug
22
Bad Credit but looking for a Savings Secured Loan?
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Hey there! I am looking for a Secured loan with my savings account or CD as the collateral. Currently I bank with Suntrust and they will not accept any credit score below 640, even though they already have the money! My current credit score is 520, and I the purpose of the loan is for debt consolidation and to boost my credit. I live in Atlanta, GA, and I was wondering if anyone knew of any bank that would give me a loan of this sorts with such a low credit score. Since the loan is secured by money, I didnt think credit score would be a problem, but apparently it is! Any help is appreciated! Thanks!
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1 Comments
December 6th, 2009 at 6:01 am
You should use the savings to pay off the debt and then rebuild your savings as quickly as possible. I know it doesn’t feel good have no savings for emergencies (and you should try to keep some if at all possible.)
But realize that if you pledge your savings for a loan, then the savings are not available to you any more than if you had used them to pay off the debt.
And if you borrow against your savings you will be paying much higher interest than you are earning on the savings so you will end up with less than if you pay off the debt and rebuild the savings.
Also paying off the debt as soon as possible by using your savings will do more for your credit score than any debt consolidation.
About the only time it makes sense to borrow against money you have is if it is in a tax sheltered plan like a 401K and you don’t want to pay penalties and taxes on an early withdrawal.