subject: Does Debt Consolidation Hurt Credit? The Concept And The Consequences [print this page] Does Debt Consolidation Hurt Credit? The Concept And The Consequences
Many rumors have circulated around financial networking forums that debt consolidation actually hurts credit.
While it is true that your financial score suffers an initial dip when you enroll in a debt-relief plan, this dip can be quickly recovered. The long-term results of enrolling in a plan to streamline your monies owed to several creditors into a single monthly payment are overwhelmingly positive and thus, the ultimate affect of consolidation is to heal credit, not hurt it.
Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out;
"...Both the concept and the consequences of debt-relief plans are simple and easy to grasp. They operate on the simple premise of paying off all your lenders instantaneously and then working to rebuild your credit score in a speedy manner..."
Concept
When you enroll in a debt consolidation program, you borrow a large sum of money from your organization and use it to pay off all the money owed to various financial institutions in one swift motion. You can often negotiate settlements with your creditors for up to 50% less than your original amount owed (which, by the way, will not hurt your at all). Once your open lines of credit are all closed, major credit reporting bureaus are likely to notice this activity and to lower your credit score momentarily.
However, consolidation streamlines your various debts into a single new line of credit which you pay off each month at a rate and on a date that you yourself choose. This means that moving forward, you are more than likely to make your payment on time every single month, helping you to log consistent positive reports with major credit bureaus.
Consequences
"...The bottom line of the matter is that debt consolidate heals your credit rating instead of hurting it. While the initial dip of your score with reporting bureaus might be jarring, you must put it into proper perceptive. By the time you need debt-relief services, you are probably financially overextended and unable to make several monthly minimum payments to various lenders. Thus, your credit score will be sliding deeper into negativity each month anyway. Taking control of the situation by streamlining your debt has the direct consequences of stopping your downward credit spiral. It than gives you the power to create a clean slate for yourself and to begin making regular, affordable payment to your new lender..." added A. Lillo.
While consolidation may hurt for a moment, it will quickly turn your negative situation into healthy fiscal progress.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com
