subject: Debt Consolidation Bad For Your Credit - Biggest Mistakes To Avoid [print this page] Debt Consolidation Bad For Your Credit - Biggest Mistakes To Avoid
Many people seem to have a grave misunderstanding of the nature of debt consolidation practices.
They believe that they can simply acquire a loan and use it to suddenly make each of their former debts disappear. Some of these individuals might even envision riding off into the sunset with the wind flowing through their hair as though they are in a poorly scripted commercial.
Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.BestDebtConsolidationServices.net -- pointed out;
"...The truth is that debt consolidation does have a few good points going for it. However, if the process is not undergone properly then it can be quite detrimental to the individual..."
When consolidation practices are begun the individual must avoid several big mistakes. The first mistake to avoid is choosing the wrong agency to work with. This might seem to be an obvious concept. However, far too many people fall prey to predatory lending practices or scam artists that take their money and leave them further in debt than ever. To avoid making your personal financial situation worse it is best to thoroughly research any company that will be worked with. The better business bureau is a vital resource in this endeavor.
Another important item to keep in mind is that consolidation in and of itself will not cause a problem for an individual's credit. It is the method in which their debts are paid off that problems might occur. Debt consolidation is one of the best possible financial methods for freeing an individual from debt. However, if it is not approached carefully it can damage their credit rating quite a bit. For instance, the advertisements that many people see proclaiming that they can pay off all of their debts at once and be free and clear of them are a bit misleading.
The truth is that those accounts will be paid in full. However, they still owe the money to the company that lent them the loan. Furthermore, if they pay off all of their debts at once and thus close those accounts it will reflect on their credit report. Their score will actually drop because it will look bad to future lenders to see so many accounts close at the same time.
"...The smartest move an individual can make is to acquire a consolidation loan, then pay off only one or two of their debts at a time. They will pay the other debts up until they are in good standing again then pay them normally from that point onward. If they have twelve outstanding debts, then they might pay off and close one debt at a time per month while paying the rest of them normally. This negates the credit hit by way of all the positive monthly payments on record and will leave the individual in incredible financial shape..." added A. Lillo.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.BestDebtConsolidationServices.net
