How Will Debt Consolidation Affect My Credit Score?

How Will Debt Consolidation Affect My Credit Score?

One of the most common misconceptions consumers harbor about debt consolidation is that it will ravage their ratings and leave them unable to qualify for loans ever again. In reality, the negative effect that management plans have on ratings is usually negligible. In many cases, consumers’ scores will not drop at all and may even rise as a result of these services. The programs help their clients tackle their bills on time and pay down their account balances quickly, both of which will result in rating improvements. Read on for an in-depth discussion of our service will affect your rating.

The Truth

After you get consolidated, you will write one check every month to the program. They then pays your creditors for you, so your bills are always paid on time as long as you pay your agency. Most debt management plans last for several years. During this time, a note will appear on your report indicating that you’re repaying the debt through a plan. This notation will remain on your report until you pay the account in full, but it should not harm your rating in the meantime.

Applying for New Credit

Even though your efforts are unlikely to harm your score, you may have difficulty qualifying for new credit while you are participating in debt consolidation. For one, many these services prohibit their clients from applying for additional credit while enrolled. Additionally, some providers frown up on a notation on your report indicating involvement with debt consolidation solutions, and thus will not issue new credit. However, most providers are more concerned with your score than your report, and providers that use the scoring model are much less likely to penalize you for participating in the program.

What Will Hurt Your Score

Although it is unlikely that a plan like ours will hurt your score, it is not impossible. There are some things that will damage your rating if they occur during the course of the program. Here are the two things that can hurt your score the most when you consolidate:

  • Late payments. After you consolidate, the job of paying your carriers will be in the hands of your consolidation organization. It’s imperative that you choose a company that you can trust to pay your creditors on time every month. Otherwise, you’ll rack up late payment notations on your credit report, which will cause your rating to drop.
  • Closing accounts. Certain programs require clients to close all of the accounts included in the consolidation. In other words, you will have to cancel all of the cards you wish to consolidate. Although this will help reduce the temptation to spend, it will also have a negative impact on your portfolio. Closing accounts reduces the amount of total credit you have available, which in turn raises your utilization ratio. A higher utilization ratio makes you look maxed out to creditors and lowers your rating. If possible, try to find a debt consolidation service that does not require you to close your accounts.

Can I Consolidate If I Have Bad Credit?

Can I Consolidate If I Have Bad Credit?

Understandably, people struggling with large amounts of debt also tend to have poor credit scores. The excessive interest rates of unsecured loans often lead to late payments and delinquent accounts, both of which take a serious toll on your ratings. Mistakenly, many consumers in this predicament believe that they cannot qualify for services such as ours because of their financial challenges. However, there are bad programs that will accept virtually all consumers in spite of their fiscal woes.

Qualifying is Easier Than You Think

Most programs such as ours have qualification criteria, but they don’t necessarily preclude consumers with poor credit. You can still become free of financial headaches through a program such as ours as long as you meet the following criteria (will vary by service):

  • Your debt is unsecured. Most companies usually only allow unsecured debt to be included in the consolidation process. Unsecured debt is unattached to a piece of collateral (e.g., house, car, etc.).
  • You have owe less than $20,000. These solutions tend to work best for consumers who owe $5,000-$20,000. Consumers with higher levels of money owed may be better served by alternative solutions.
  • You are not seriously delinquent on your accounts. To qualify, you cannot be more than three months behind on any of your accounts. Accounts that are in later stages of delinquency are more difficult to consolidate.

Consolidate Debt Loans

If you have financial challenges, you will most likely be unable to qualify for assistance, which are an alternative to professional consolidation solutions. These services usually require the borrower to have good or excellent credit, especially for loans with affordable interest rates. For example, too much money owed may prevent you from qualifying for loans. If you cannot qualify for these kinds of solutions, you still have a good chance of qualifying for assistance.

For consumers who are seriously delinquent on their accounts and/or have too much debt to qualify for traditional assistance, there are other options. For one, you may be able to consolidate through a settlement or negotiation. With this option, a service such as ours negotiates with your creditors in order to arrange a payoff amount. Most consolidation services offer this intervention for clients with serious credit problems.

Alternatively, consumers for whom bad debt consolidation does not work may consider bankruptcy. If you have high levels of money owed, seriously delinquent accounts, and have exhausted all other options, bankruptcy may be the best way to become free from financial headaches. Bankruptcy will have a powerful negative impact on your credit score for several years, but you will be able to start fresh and begin rebuilding your credit immediately. Before you declare bankruptcy, make sure you discuss your options with us first.

What Are the Benefits of Debt Consolidation?

What Are the Benefits of Debt Consolidation?

Debt consolidation programs have a multitude of benefits to offer. For one, these plans can improve the interest rates on your existing accounts. Lower rates translate into more affordable monthly payments, enabling you to slash what you owe rapidly without putting an undue strain on your finances. In other words, having your finances under control can help you save money and break free of what you owe in a fairly short period of time. In this post, we’ll discuss the benefits of credit consolidation in more detail.

Improved Interest Rates

Exorbitant financing rates are the reason most consumers get caught in the unrelenting cycle of debt. When the rates on your accounts are too high, you will see little progress even if you make sizeable payments diligently. To rectify this situation, debt reduction plans focus first and foremost on improving the interest rates of your debts. Our program will coordinate with your creditors in order to arrange the best rates possible for you. In most cases, this is precisely the solution consumers need in order to overcome financial issues quickly and affordably. More reasonable interest rates allow a larger portion of your money to be applied to the principal of what you owe instead of interest, thus diminishing your balances faster.

Manageable Monthly Expenses

A corollary of improved interest rates is a more manageable monthly obligation. Once you consolidate and your interest rates are adjusted, your monthly payments will improve to ease the burden they place on your budget. You will enjoy more progress in taking care of what you owe without having to devote additional funds to your monthly payments. With the right plan, you will have more money in your budget to spend as you please. You can use the money to invest, save, or make the purchases you’ve delayed because of your debt obligations.

Become Debt Free Quickly

Our solutions minimize the amount of money you spend on interest expenses, thus enabling you to get free of debt faster. Without ever increasing your monthly budget, consolidation helps you tackle your balances in the shortest amount of time possible. Instead of spending decades making minimum payments, you can be done with debt once and for all after you complete your program.

Credit Rating Improvements

There are few things more deleterious to your rating than balances owed and late payments, but we can help you with both of these issues. After you have consolidated, you may be able to tackle your balances rapidly, which may improve your credit rating in the process. Lower balances on your accounts may improve your credit utilization ratio, which is an important factor creditors use to determine your credit score. Moreover, your provider will devise a repayment plan that may make it easier for you to pay your bills on time every month. As a result, you could be much more likely to pay on time, which will also help your credit!

Consider Consolidating Your Debt

Consider Consolidating Your Debt

We can guide you down the road to financial recovery. You could benefit from improved credit scores and fewer statements piling up, significant and lasting savings and freedom from worries. Let us assist you.

Consider Us Your Ally

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Joining forces with us, a non-profit agency, will empower you on many levels. You will be telling creditors that you won’t take no for an answer – that you are serious about solving your debt. More importantly, they know you have contacted a leading source for financial freedom. One with a strong record of keeping consumers on track. Every effort made on behalf of our clients will be personalized to meet their goals and budget.

Getting started with our proven methods

With our popular services and superior guidance, combined with your dedication, you could work toward putting your money issues behind you once and for all. Before you know it, the savings start to add up.

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Say hello to a brighter future. We’ve all been saddled with money problems at some point. Our trusted experts are here to help, regardless of how long debt has kept you down, or how much you must overcome. We know it is not easy at all solving debt on one’s own. Maybe you made mistakes in the past, or perhaps factors outside your control have caused you to fall on hard times. Let us be of assistance as you seek the counseling that will turn your life around for the better.

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Debt consolidation services – the many benefits

You could see an improved credit rating as the result of online debt consolidation services – which would help you afford future purchases such as a car or home. You’ll most likely be able to enjoy all aspects of life more because you will not feel bogged down by your finances. In addition to the possibility of substantial monetary gains, you will have the opportunity to sleep better at night, having committed your time to more important things.

This is an overall advantage of debt consolidation services that is unmatched elsewhere. Now is a great time to learn more about various types of free debt consolidation services. Experts are standing by to teach you all there is to know, and point you in the right direction. There is no pressure to commit at any time, and no fine print that binds you to do so. Just the chance for you to learn from an unmatched group of experts and move on with life starting here and now!