Will Debt Consolidation Hurt
My Credit?
Well, the Answer Depends on
You! If you are heavily in
debt and have late payments along with defaulted loans on your
credit report, you need to do something NOW to take care of the
problem. Debt consolidation is one option that could work for
you. You may have heard that consolidation will hurt your
credit, but the truth is that it depends on the debt
consolidation company and your willingness to do what you need
to do to fix your credit rating.
The first thing you want to do is make
sure the company you work with is above board and can honestly
lower your interest rates. If you do that, you have a good
start.
Debt consolidation can help your
credit. If you take out a debt consolidation loan, the unpaid
bills and late payments on your credit report will be settled.
All you will have to think about is the one bill from the loan
consolidation company.
If you choose debt consolidation
without a loan, the bad credit posted won't be off until you
have paid them, but you will be able to pay them faster, so
still, in the long run, debt consolidation will
help.
One downside to debt consolidation is
that creditors may not be pleased if you have settled past debt
for less money. It is still better than having bad reports on
your credit report and MUCH better than a
bankruptcy.
If you are careful to make your monthly
payment on time every month and not accrue more debt, your
credit will improve dramatically. However, if you pile on more
debt because you have been too comfortable with your lower
payment, you could end up back where you started from or worse
off than before - with a defaulted loan and an inability to
pay.
Debt consolidation only works to
improve your credit if you are willing to make some changes in
your spending habits. If you are committed to repairing your
credit, debt consolidation will only help you - not hinder
you.
Stay current with your payment; don't
add on more debt; pay more than your minimum payment. Doing
these things will make consolidation work for you instead of
against you.
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