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I need to borrow some money to pay for dental work. This will be my first time taking on debt independently. I would like to repay my dental debt at a reasonably pace without hurting my credit score. I'm asking for advice as to whether I should look for a personal loan, a credit card or another type of borrowing arrangement.

Here are some details about my situation that may help people offer concrete advice:

  • I need to spend $4000 on a series of dental procedures during the next two months.
  • I can allocate about $550 per month to dental debt (some of which comes from a tax-free health savings account).
  • I have good credit (750) and am concerned about upholding my score.

I know that this question is specific, but I think it will help others who share the concern of borrowing to repay medical bills. Thanks in advance for any constructive feedback you can offer.

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The best option would be to have the dental office allow you pay in installments. That would be probably the cheapest and most convenient way. When high amounts are involved - many medical offices are flexible with payments and allow spreading over long period of time, so you should check it out.

Otherwise, credit cards would probably be the most expensive loan, but you should shop around and compare the rates offered to you, it is hard to guess would you may get.

  • While some dentists still accept installment payments, increasingly, they are stopping that practice. Instead, many will help you sign up for a healthcare credit card (like CareCredit or such). So you could choose between a new use-specific card, or an existing card. Know your existing interest rates and credit limits going in, and you can make the proper choice. – Joe Strazzere Feb 11 '14 at 17:30
  • @JoeStrazzere Unfortunately, your concern seems to apply in my case. Most of the providers I've researched offer Care Credit cards instead of payment plans. I don't see any incentive to use Care Credit. While they offer a temporary no-interest period, the interest for late payments is retroactive and very high: about 30 percent. If I were to take out credit, I don't see any reason to use Care Credit instead of a regular credit card. Regular credit has an introductory no-interest period, too, and I will repay my debt before it expires. – hawkharris Feb 11 '14 at 20:45
  • @hawkharris - makes sense. A CareCredit card is pretty easy to get instantly, and sort of by definition the card limit fits your (dental) needs. If you have other credit card sources that would be cheaper (particularly if you intend to miss payments and invoke a late charge) and still have a limit that fits your needs - that makes sense too. – Joe Strazzere Feb 11 '14 at 21:22
  • Thanks for the insights, Joe. I appreciate your feedback. – hawkharris Feb 12 '14 at 2:08
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I am a bit confused here as to how a 4K loan will negatively effect your credit score if payments are made on time. FICO scores are based upon how well you borrow. If you borrow, pay back on time, your score will not go down. Perhaps a bit in the short run when you first secure the loan, but that should come back quickly. In the long run it will help improve your score which seems like it would be more important to you.

Having the provider finance your loan will probably not show up on your credit unless you fail to pay and they send to collections.

If the score is so important to you, which I think is somewhat unwise, then use a credit card. With a 750 you should be able to get a pretty good rate, but assume it is 18%. In less then 9 months you will have it paid off, paying about $293 in interest. You could consider that a part of the cost of doing business for maintaining a high credit score. Again not what I would advise, but it might meet your needs.

One alternative is go with lending club. With that kind of score, you are looking at 7% or so. At $500 a month, you are still looking at just over 8 months and paying about $100 in interest. Much less money for improving your credit score.

Edit based upon the comment: "My understanding is that using a significant portion of your available credit balance is bad for your credit, even if you pay your bills on time."

Define bad. As I said it might go down slightly in the short term. In three months you will have almost 33% of the loan paid off, which is significantly lower then the original balance. If you go the credit card route, you may be approved for quite a bit more then the 4000, which may not move the needle at all. Are you planning on buying a home in the next 90 days? If not, why does a small short term dip matter? Will your life really be effected if your score goes down to 720 for three months?

Keep in mind this is exactly the kind of behavior that the banks want you to engage in. If you worship your FICO score, which gives no indication of wealth then you should do exactly what I am suggesting.

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    Agreed. Even if he throws his utilization out of whack, it will adjust after each payment is made. $293 is a low price to pay to fix an urgent matter. – JoeTaxpayer Feb 11 '14 at 15:29
  • My understanding is that using a significant portion of your available credit balance is bad for your credit, even if you pay your bills on time: credit.about.com/od/creditcardbasics/tp/… – hawkharris Feb 11 '14 at 15:31

protected by Chris W. Rea Mar 3 '14 at 10:24

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