Expert: Joe Montgomery - 5/30/2007

Question
QUESTION: Hi, I'm 29 and I am wondering if I would be approved for a $15000 personal
loan to pay off my debts. I have a 664 credit score. I have a 12 credit cards
(most are store cards) that tota a little over $14,000. I am currently paying
close to $900 total each month trying to pay these off. I want to totally get rid
of these, but at the rate I'm going I'm never going to pay them down. I have
cut them all up and haven't used them since last year. Would a bank approve
me for a loan? I would thnk that a bank would see that since I'm finanically
able to pay $900 a month on them, that I'd be able to pay their lower monthly
payment instead, right?
I do not own a home, so I can't use that as collateral. Would I have to have a
cosigner?
Thanks for your help.


ANSWER: Hello Holly,
There are a lot of factors that one would need to know to see if you would qualify for a loan of this type.  Employment history, your total income, and other things.  You are correct with noting that if you are able to pay $900 a month, you would be able to handle a regular personal loan for the same amount, the issue is just that it's different for you to owe 10 companies $1,000 instead of 1 company being owed $10,000-from their point of view, as they have more risk.
A bank MIGHT qualify you for a portion of that amount--again, I don't know all your details, but another option would be to apply to a larger credit company as see if they will let you pay off the other cards and roll it into the new one.  Some companies offer 0% interest for 6 months if you consolidate other card balances on your debt with them.  Then you could pay more than the minimum amount and pay the debt off sooner.
I would recommend talking to a bank, see what they could do, and for how much, and then possibly talking to 1 credit card company to consolidate the remainder of your debt on 1 card.
I hope this helps, but the first step is to call a loan officer at the bank, and give them a breakdown of your situation, and see what they can do.
I hope I answered your question.. and good luck!

---------- FOLLOW-UP ----------

QUESTION: Thanks so much for your quick answer! It is extremely helpful. I never
thought about getting a little from the bank and then rolling the rest on a
credit card.

I have one last question, though. Would I have a better chance of getting a
loan by going to a larger bank that I've been banking with since 2003
(Wachovia) or a smaller community bank that my family has banked with for
decades? I used to have an account with the community bank, too, but when I
went to college had to switch banks.

Answer
I think either is a good idea, but the community bank would have a little more control in their decision as they are the one's making the loan.  Wachovia has a large structure that has to be followed before they can make a decision.  I've dealt with two "small town" banks in the past, and both were very accommodating.