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What is the best way to utilize a new HELOC to improve credit if you have multiple collection accounts and an auto loan?

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2007-07-07 18:16:44
2007-07-07 18:16:44

First, pay your collections. Unless your rate on your HELOC is lower than your auto loan, do nothing. But, always try not to take unsecure debt(car loans) and secure them on your proerty through a HELOC or mortgage. *** I suggest you pay down all debt that is late, past due or delinquent. A car loan, by definition, is secured debt. Any debt that you can roll into a heloc MAY be a good idea IF you have control your finances and you do not take on any additional debt. Typically the interest on a car loan is not tax deductible. If you pay off your car loan with your heloc you effectively roll your car loan into your heloc. In many cases this allows you to deduct the interest from your GTI (Gross Taxable Income). See a tax professional for details on your specific situation. Remember, whatever you save in interest on loans or extensions of credit, you effectively put back in your pocket. Let Uncle Sam pay as much of your interest as he will permit.

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