How Will Debt Consolidation Affect My Credit? Positives And Negatives

How Will Debt Consolidation Affect My Credit? Positives And Negatives

One of the first things that anyone who has to rid themselves of financial liabilities must do is decide whether to go with a settlement or a consolidation plan, or if they think it would be better to go at it alone.

While all of these three possibilities have their own positives and negatives, for someone who wishes to protect his or her credit rating, debt consolidation is definitely the best alternative.

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

"...Anybody reading this article likely knows how debt consolidation works. The debtor takes out a loan which is used to pay off all other loans. Subsequently, he or she has only a single monthly payment to make. The question is why this is better than debt settlement or an independent attempt to reduce the amount of money that one owes..."

In fact, consolidation has many positives over settlement. Credit consolidation is simply a restructuring of one's liabilities, whereas settlement is the admission of the debtor that he or she cannot pay off his or her debt. This automatically is a smear on the record. A negative here is that settlement is guaranteed to reduce one's debt, while consolidation leaves one with the exact same amount of red ink, just restructured and easier to manage.

Debt consolidation has a number of positives over an independent attempt. First, there is the ease of payment. One bill a month is a much larger benefit than many people understand it to be. It is predictable and most consolidation companies will give their customers very low interest rates. The simple fact that nearly everyone manages to pay off their liabilities is a positive towards one's credit score. Also, the moral support that the companies give one is something that one would never get if he or she tried to reduce his or her liabilities alone. Of course, trying to reduce red ink on one's own will not reduce his or her score either, but it is far harder to accomplish.

"...The truth is that consolidation cannot hurt one's credit. It is impossible. However, there are many ways that it can help one's credit, including the moral support, having fewer lines of credit open, the easy monthly payments, and the unlikelihood that a consolidation organization will give a negative report to one of the major bureaus. If one wishes to increase his or her credit score, consolidating his or her debt is likely the best way to do so..." added A. Lillo.

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

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