Hi all, I'm new to the forum. I know taking loans against your tsp isn't the best idea, but I'm in a situation where that's my best option. I was wondering If I take out a loan to pay off all my credit card debt would this help out my credit score? Does the TSP loan count towards your credit score?
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Loan and Credit Score
- Thread starter Ski21
- Start date
James48843
TSP Talk Royalty
- Reaction score
- 905
It does not show up on a credit score or in your credit file.
I hope you find peace and happiness in 2010 - although I always am concerned when I hear someone is using TSP loans to cover credit card debt- That is lost opportunity to build your nest egg- and should ONLY be done if there is no other choice.
Welcome, and good luck.
Callme_CO
TSP Strategist
- Reaction score
- 7
I completely agree with James. Also this is only treating the symptom. If you end up using the cards again your back where you started with a tsp loan your repaying.
James48843
TSP Talk Royalty
- Reaction score
- 905
Ways to improve your credit score:
1. Make EVERY payment on time.
2. Reduce the amount of debt on an open credit card to no more than 50% of the line of credit they are carrying. A good part of your score is how much debt you are carrying compared to how much is available. If you carry only 20% of your credit limit by all lenders, you will be viewed much more favorably than if you have a card or credit line that is maxed out.
3. Spend less than you make. If you budget and are able to meet all your bills, make more than the minimum credit card payments, and still save money in a savings account, then you are better than most Americans right now, and your credit score will improve.
4. Time. The longer you have a positive credit history, the better your score will become.
5. Carry ONE low-interest credit card- Those who carry one or two cards, with NO debt, are seen as better able to manage debt than those who do not hold cards at all. But remember, if you have a card, the purpose is simply to show that you can hold revolving credit and not get into trouble. Get one low interest one, put it in the freezer inside an ice cube try, and freeze it solid. Don't get it out for flights of fancy purchases- Never use it unless absolutely necessary.
6. Own, don't rent your home.
7. Stay in one place, at one job, for a longer period of time, and your score will improve.
Those are just some tips that others have mentioned on how to improve your credit score.
One late payment to one company can really knock your score down.
Story on FICO scoring, and common mistakes people make:
http://finance.yahoo.com/banking-bu...t-mistakes-affect-scores?mod=bb-creditreports
Good luck.
I've cancelled all my cards except one. This is my last resort, even if I sale my rental property I won't have enough to cover the credit card debt. I'm hoping since I still got about 20 years left of work I can recoup the lost, by putting extra into the tsp when I can.
KevinD
Market Veteran
- Reaction score
- 41
Closing these accounts will hurt your score more than you might imagine. Lets say you have 2 cards with a $5K available credit line each. One has a zero balance and the other is maxed out at $5K. You are using half of your available credit. Then you close the one with a zero balance and presto...you are instantly at 100% of your available credit.
It's best to pay the cards off but leave them open. You still have the available credit but your ratios of debt to available credit look better to the credit reporting agencies so your score could actually go up.
Good luck and WELCOME!
Show-me
TSP Legend
- Reaction score
- 104
I scanned through the post and most of the answers are there but I will throw in my two cents.
TSP loan does not show up on your credit report. It is your money that you are borrowing.
Canceling credit cards will devastate you credit rating. Available credit is a huge factor in your score so I recommend cutting up the ones you do not want to use unless you have a huge number of them you can not keep track of.
Selling the rental property may be better than trading dept from a card to your TSP account. Only you will know. Good luck.
TSP loan does not show up on your credit report. It is your money that you are borrowing.
Canceling credit cards will devastate you credit rating. Available credit is a huge factor in your score so I recommend cutting up the ones you do not want to use unless you have a huge number of them you can not keep track of.
Selling the rental property may be better than trading dept from a card to your TSP account. Only you will know. Good luck.
Callme_CO
TSP Strategist
- Reaction score
- 7
How about spending the money you have and not borrowing any. I'm not a fan of paying today for yesterdays fun. Used to be but man am i not now. The only loan i will ever take is for a house and no more than 15 year one at that. I'll pay the little extra in interest for a home loan than the tons in interest trying to keep my fico score up. But that's just me. I say keep the rental if it's generating cash and your not bleeding into it. Especially since the sale of it alone wont take care of these debts. But do what your comfortable with.
Show-me
TSP Legend
- Reaction score
- 104
It should be very quick, but it is the holidays. I would guess within a week.
Cool thanks for the reply. I was also wondering how it would work if I'm borrowing the maximum amount allowed today, but say the stock takes a hit and tomorrow that amount would be lower. Do they approve it off of todays allowed amount or if it's lower tomorrow would I get declined?
Show-me
TSP Legend
- Reaction score
- 104
You have to have the money in the G fund. They will not sell your stock or bond positions to fund your loan. You have to do that.
