Are you wondering how to get out of debt? In your quest to getting rid of debt, how will the efforts impact your overall financial health? You don’t want to start missing payments and end up with bad credit. So, can consolidating debt help credit score?
Can Consolidating Debt Help Credit Score?
Consolidating debt simply put is taking multiple debts and turning them into one debt. So, can consolidating debt help credit score?
One Loan vs Many
When you convert different debt into one big loan with debt consolidation, you are only focusing on one big payment. This way, there is less chance of missed payments and therefore can be a good move for your credit. So how else can consolidating debt help credit score? A personal loan can help you pay the credit cards faster since the interest rate is lower. However, you have to be careful not to rack up more consumer debt on those cards now that the balances are low again or paid off.
If consolidating debt help credit score, why do people have so many reservations? What should you really be cautious about?
Watch out for warning signs!
If you sign up for a debt consolidation program, you do have to read the fine print as many do damage your credit if the accounts with your creditors get paid late and get noted as making partial payments. And, beware of loans that have a higher interest rate than your current loans – the new loan won’t help you save any money this way.
Is this what works for you?
The decision to consolidate your debt depends on the interest rate you receive. It’s important to get to a point where you’re able to afford your minimum repayments again. This will help you in the process of rebuilding credit to aid your future financial worthiness. Only take this consolidation route if you are confident you can remain disciplined. Change your spending habits once you’ve combined the applicable debts.
If you are searching for consolidated credit solutions, speak with a certified counselor at ACCC today. Call 800-769-3571.