subject: Does Debt Consolidation Affect Your Credit Score? Know the Effects [print this page] Does Debt Consolidation Affect Your Credit Score? Know the Effects
Whether you have found yourself in monetary problems due to unemployment, health, late payments, or mismanagement of funds.
Debt consolidation is an effective way to work with creditors while re-establishing your reputation. But does debt consolidation affect your credit ?
Aurora Lillo Editor of the "Best Debt Consolidation Companies" website -- http://www.BestDebtConsolidationCompanies.net -- pointed out;
"...You need to realize that as you start the process some of your creditors may refuse to work with you. No matter what your circumstances they simply won't budge. While the negotiation process is taking place, you will find that your credit score will fall as the amount you owe rises due to interest rates and late fees. The adverse effects to your financial condition will depend on the financial institution..."
In some instances you may find that, once you start the consolidation process, it can take up to four months for the program to take effect. During this time your debt will continue to mount and show on your credit as late or missed payments.
Depending on your circumstances, and the amount owed, it may be in your best interest to find a certified credit counselor or join a reputable debt consolidation program. This is especially good for those who have debt of $5,000 or less. Trying to negotiate on your own, you may find that you are paying more than if you go through a counselor or consolidation firm. Be careful when choosing a counselor or program that they have a good reputation. They understand that a lender expects people to run up debt. When your loan has been recovered the lender may issue you another card with a much higher interest rate. For this reason alone relief counseling can help guide you in the right direction.
Make sure that you have enough of an encumbrance to consider consolidation. With a lower amount as mentioned, you may spend more money consolidating. In that case you may want to approach your bank about an equity line if possible. You will then have one simple payment to make each month to the bank as opposed to many smaller ones with large interest rates and late charges that quickly accumulate.
"...Does debt consolidation affect your credit score? It really depends on how you approach the problem and the amount owed. Drawbacks will include service fees, only certain accepted delinquencies, and large interest rates. If done correctly the effect on your FICO can be minimal and for a short duration..." added A. Lillo.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.BestDebtConsolidationCompanies.net
