How Badly Does Debt Consolidation Hurt Credit Rating?

People often make the mistake of thinking that debt consolidation is similar to bankruptcy

. They are afraid of investigating the service, because they fear what it will do to their credit rating. This misconception can cost you thousands of dollars. You owe it to yourself to look into debt consolidation. Understanding what it is and how it works should remove the fears that it will harm your credit. Paula de la Torre Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out; Consolidation of debts is a simple process. You get a loan that has a lower interest rate than the debt you have. Those loans are paid off by a single lower interest loan, with favorable payment terms. This can lower your monthly payments, lower your interest rate, and potentially get you out of debt faster than you thought. Lending institutions provide the loan, so you make a single payment every month to one loan. The consolidation process has many advantages that can keep your credit from getting harmed First, your individual credit card or high interest debts are paid off in full. This means that any risk you had of negative reports from them is eliminated. Since they have been paid, they no longer report to your credit, and show that the debt has been paid. This is actually a favorable mark on your credit record. You may also find that your payments go down because of the lower interest and more favorable terms. The loan terms includes the length of time before the loan is paid off. The longer the term is the lower the monthly payment. This means that your debt ratio is also lowered. When potential lenders see a low debt to income ratio, they know that you have more money to pay for potential credit lines. You also can apply the saved money directly to the principle of the loan, paying it even faster. This can eliminate your debts, and free your credit P. de la Torre added. Consolidation loans are one way out of debt that may not have a negative impact on your credit rating. In some cases, it can even help your credit score. It takes discipline to use this tool wisely. If you do, freedom from debt is not as far away as you think. You can start to live a debt free life, with your credit restored. Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com

How Badly Does Debt Consolidation Hurt Credit Rating?

By: Hector Milla

POST COMMENT

Do Debt Consolidation Agencies Affect Your Credit? Credit Card Debt Facts - How Will The CARD Act Change Your Financial Life? Home Depot Credit Card Facts - All On One Page What Do Debt Consolidation Agencies Do To The Score On Your Credit? Tips on Buying Credit Union or Bank Repos Directly without Dealers, Commissions, or Fees Credit Cards For Bad Credit - Over-limit Secrets You Need To Know Credit Report Information: Disputing Errors Balance transfer credit cards reach new popularity avoid credit cards and get debt relief Making Credit Card Debt Help Work For You Banks Versus Credit Unions What's The Best Way To Pay Credit Card Debt? Tips For Those Who Are Up To Their Necks In Credit Card Wondering How To Increase Credit Limit On Credit Card?