Do Debt Consolidation Loans Affect Credit Rating? [debtconsolidationsreviews]

Do Debt Consolidation Loans Affect Credit Rating? [debtconsolidationsreviews]

Some of the principles behind consolidating your debt explained.

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Debt consolidation is one of the most widely used methods of financial rescue, but also the one that has probably the most myths surrounding it. Many people talk about debt consolidation and offer differing opinions about it. One of these myths is that debt consolidation hurts your credit rating. In fact, that could not be further from the truth. It is far more likely that getting a loan, if you don't want it to hurt your credit score, then it won't.

There are a number of ways that a consolidation loan can help your credit score. The first of these is the simple fact that you are doing something to try to be able to pay off your creditors. Your scoring is a number that basically condenses how likely a creditor is to get back their money, as a way for them to calculate the risk inherent in lending to you. Your credit score may not explicitly reflect that you are trying to pay off your creditors, but that will show up as a positive on a comprehensive credit report that many creditors ask for, when deciding if they will give you a loan.

There are also a number of miscellaneous things that are affected by getting such a loan.

For example, you are closing a number of lines of credit, which alone will help your credit score, as each open line of credit "pings" your score for a little bit.

Credit counseling can help too, which many consolidation companies offer. The only thing involved in consolidation that could possibly hurt your credit is if your consolidation company offers a debt settlement service, which you can probably refuse if you don't want to hurt your rating. You should note, however, that settlement will reduce your debt and, therefore, your debt to income ratio, so it too could possibly help your credit score.

But if you wish to be safe, it is possible to ensure that your credit score will not fall at all from a consolidation loan.

By the way, there certainly are reputable debt consolidation companies in the market, so you must research and compare several services in order to to determine the one that meets your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and trusted debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.

More Do Debt Consolidation Loans Affect Credit Rating? Issues

Question by : Where can someone go to get the best rates on debt consolidation loans? What's a good rate...? ...to expect? How can you evaluate differnt lenders in this space? I am trying to help someone avoid bankruptcy, but need to find out if this is a viable option. Currently he is paying 26.49 % interest!!! Best answer for Where can someone go to get the best rates on debt consolidation loans? What's a good rate...?:

Answer by Wayne Z
Personal/debt consolidation loans are next to impossible to get right now regardless of credit because you are asking one bank/finance company to take all of the default risk. There are two Peer to Peer lending sites that are legit (www.prosper.com and www.lendingclub.com). He can try those but I can not guarantee a loan.

Answer by Pace
has already proven themselves a credit risk. In the following "you" is the person in trouble. If you have collateral or equity, then you can get a secured loan at a lower interest rate. If you have family or freinds that trust you to pay them back, get a low or no interest loan from them. You might try applying for another credit card and do a balance transfer, but other than that you have about 4 choices... 1) continue paying your debt as quickly as you can concentrating on the higher interest bills first. 2) just stop paying completely, and deal with 7 years of bad credit and collectors harrassing you. 3) deal with a debt consolidation company - this requires you to give up your cards - not certain if you get 7 years of bad credit out of it. 4) file bankruptcy - last resort; any of the options above are better. I'd personally go with option one, as it's the best in the long run. The first thing you need to do is make a budget (and stick to it), cut out the luxuries (cable, cell phone, movies, bar trips, alcohol, eating out, clothing), and limit the amount spent on necessities - clip coupons for stuff you use, but don't buy it if you're not going to use it. Consider public transportation rather than paying for gas to get around. Hold a yard/garage sale and get rid of stuff you don't need that someone else might want; every little bit helps. Or sell it on e-bay. I know it's tough and requires sacrifice and dedication, but they screwed up, then need to apply the effort to fix it.

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