subject: What Effect Does Using a Debt Consolidation Agency Have On Your Credit Rating? [print this page] Author: Hector Milla Author: Hector Milla
With the economy the way it is today many people are turning to debt consolidation as a means of getting their financial affairs in order. If youre considering this, and many people today are, you may also be wondering if it will affect your credit rating. Paula de la Torre Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out; The first thing to consider is that credit reports list accounts that are late, overdue etc. The good thing is that it takes up to six months sometimes for this to actually be noted on your credit report. Bureaus also list accounts that are in counseling, settlement and delinquent Now the good thing about consolidation is that when you take out the loan and your credit accounts, loans etc. get paid off by it they show on your credit report as paid, or with zero balances. At this point many people think it is a good idea to close the paid off credit card accounts. The exact opposite is true. Paying them off will do nothing to improve your rating. The more credit you have available on each account the better. Lenders like to see this, low balances (especially zero balances) and high limits work in favor of you score. Some lenders will look beyond the numbers to a degree and if you consistently make on time payments will also raise your score. The way to get the best rates on your loans in the future is to be current on all of your payments, including mortgages, home equity loans and credit cards P. de la Torre added. So to put it in simple language, debt consolidation is usually a second home loan against your house. These loans have low interest rates and are usually added to your home mortgage. Usually there are no negative impacts to your credit but they do take longer to pay off than using a debt settlement service. They also use your home to secure the loan so if for some reason you get behind on payments again you could risk using losing you home. If possible, debt settlement while it will hurt your credit for a while has a lot less risks involved that consolidation. Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.comAbout the Author:
Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.
