Does Debt Consolidation Ruin Your Credit Score? No, It Doesn't

Does Debt Consolidation Ruin Your Credit Score

? No, It Doesn't

Some people believe that debt consolidation lowers your credit rating because you are using another party to help coordinate paying your bills.

You will get assistance in the process but the end result of a successfully combining your debts is improved scores.

Within the first few months of joining a consolidation program, your scores may decrease somewhat because the debt management company will have to make arrangements with all of your creditors and that could take a few months, depending on the company.

Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out;

"...Some organizations may reject a proposed payback amount, which would need to be altered and resubmitted. Many companies handle transactions through fax and/or email, but if it's carried out by snail mail the process will be prolonged..."

Once all the smoke has cleared and your consolidation company has set up payment arrangements with all your creditors, your report will begin to show that you are making all of your payments on time. Your credit score will begin to climb. It is a process, but it works.

Your credit score is likely to be higher when consolidating debts because you'll only be making one payment to the consolidation company who will disperse the monies to your creditors so you are less likely to forget about and be late on individual bills. Have you ever had a rough week or month and a bill just slipped your mind? Well, when you only have one payment to make, that is much less likely to happen.

If you have ever been set up in an automatic payment plan for your bills where the money is electronically withdrawn from your checking account you run the risk of being overdrawn and charged a fee. With a consolidation loan, if you were ever in that situation, you would only be overdrawn once for the one payment. This could save you money in fees, providing more money for bills or anything else. For anyone who gets hit with a lot of unexpected withdrawal or late fees, the decrease in penalties will help keep you on the track to consistently pay all your bills on time and directly improve your credit score.

"...Creditors don't necessarily see consolidation as a bad thing. It's more of a proactive way to pay back your debt. Once you have successfully completed a debt program, your credit score will only go up as long as your financial responsibilities outside the program are taken care of..." added A. Lillo.

Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com

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