Personal Loan To Pay Off Credit Card Debt - Happy Money (2024)

FAQs

Does taking out a personal loan to pay off credit cards help credit score? ›

Those who used personal loans to pay off less than $5,000 in credit card debt saw their scores increase by an average of 16 points after a month and 12 points after three months. While smaller in comparison, those increases can still be beneficial.

Application process

You can qualify for a Happy Money loan with a credit score of 640 and no delinquencies. To prequalify, you'll be asked to provide your name, birth date (you must be at least 18 years old to apply, or 19 years old if you live in Alabama), annual income and any mortgage payments.

Pay off credit card debt and fund your happiness

Personal loans between $5,000-$40,000.

Strictly speaking, Happy Money isn't a bank. Instead, it partners with other financial institutions to originate loans. Still, if you're asking, "Is Happy Money legit?," the answer is yes. Happy Money loans are for borrowers who are serious about eliminating their credit card debt.

Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio. While in some cases your credit scores may dip slightly from paying off debt, that doesn't mean you should ever ignore what you owe.

As of November 2023, the average interest rate on a personal loan with a 24-month term was 12.35%, according to data from the Federal Reserve. So, by using a personal loan to pay off your credit card debt, there could be significant savings, as the average credit card rate is currently 21.47%.

Happy Money may approve you the same day you apply or within 7 business days. After your application is approved and you accept the offer, it takes 2 -6 business days to receive your funds, which Happy Money will send to you by electronic bank transfer.

No, Happy Money does not call your employer. Happy Money instead uses the financial information and documents you provide during the application process, like a W-2 form, bank statement or pay stub, to verify that you are employed and that you have enough income to afford the loan.

Happy Money reports payments to all three major credit bureaus (Equifax, Experian and TransUnion), so on-time payments will help build your credit score, but missed payments will hurt it. Setting up automatic payments and keeping an eye on your budget are two ways to manage your loan payments.

Some lenders may charge a prepayment penalty if you pay off your personal loan earlier than the agreed-upon term. Depending on the loan amount, the early payoff fee can take a hefty bite out of your finances. Fortunately, Happy Money and many other lenders do not charge you for paying off your loan early.

What is the largest amount you can borrow on a personal loan? ›

Although loan amounts vary across lenders, the maximum amount for personal loans typically ranges from $500 to $100,000. In some cases, you may qualify for a loan larger than what you need. Before accepting any loan, consider what you can afford to repay and be sure you don't borrow more than what you can manage.

No, Happy Money is not a direct lender, so they do not handle the full loan process. Instead, Happy Money will consider your loan application and decide if you're approved, then one of their partners will actually fund the loan. You will still make your monthly payments through Happy Money, though.

Happy Money uses Alliant, Cross River Bank and Blue Federal Credit Union, among other banks, to originate personal loans.

Checking your rate and reviewing loan offers on the Happy Money website will not affect your credit; it will result in a soft credit inquiry that is only visible to you. If you receive a loan through Happy Money, then a hard inquiry will appear on your credit report after you receive your loan.

Consistent, on-time payments on your personal loan will increase your score over time. It may take a few months for the benefits to add up, however, and at least a year to offset the negative impact of a hard inquiry from when you apply with a lender.

Can you pay a loan with a credit card? Yes, you can pay a loan with a credit card, but it's usually less convenient and comes with extra fees. If you can afford to make your loan payment from your bank account, that tends to be the better option. Hardly any lenders accept credit card payments.

You can consolidate your debts into one payment

You have to make sure you're making and maximizing your payments each month. Using a personal loan to pay off debt helps you get rid of multiple payments and go down to one payment per month — and hopefully with a much lower APR.

A personal loan will cause a slight hit to your credit score in the short term, but making on-time payments will bring it back up and can help improve your credit in the long run. A personal loan calculator can be a big help when it comes to determining the loan repayment term that's right for you.