Does consolidating debt hurt your credit

06 May

Consolidating your maxed out credit cards with an instalment loan (a debt consolidation loan) will more than likely help your credit score.

Having a variety of different types of credit accounts will help improve your credit score and paying off credit card debt is always a good idea.

While every debt consolidation option has its own unique effect on your credit rating there are a few positive affects you can look forward too: If you handle debt consolidation appropriately and responsibly, the long term effect on your credit score and report should be more positive than negative.

Trying to cut corners or ignoring the issues at hand will end up doing more harm than good.

Basically, this happens because there can be a gap between when a payment was supposed to be made on your previous payment schedule and the payments you’re making now.

This only happens in the first month of the program.

A balance transfer is almost never free so if the fees associated with it are high, it might not be worth it.A debt consolidation loan can be an extremely useful tool, just make sure you’re getting one that is actually going to help your debt situation, and not hurt it.Your best bet is to go with an alternative lender, especially if your credit is already less than great.Also make sure that the low interest rate you thought you were getting doesn’t end after a short introductory period.There are a few issues that you need to take into consideration before you decide that a balance transfer is a good idea: If you’re able to find a 0% credit card and you’re able to both save money because of a lower interest rate and pay off your debts faster, a balance transfer can work.