subject: Does Debt Consolidation Hurt Your Credit? About Credit Scores And Rating [print this page] Does Debt Consolidation Hurt Your Credit? About Credit Scores And Rating
The honest answer to this question is that, yes, debt consolidation will initially lower your credit score.
The deeper truth of the matter - however - is that over the long run, it can serve to repair and even improve your score by leaps and bounds.
Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out;
"...Many individuals are paralyzed by the thought of enrolling in a debt-relief program that will initially hurt their credit score. However, this paralysis typically results in a worsened financial condition, as inaction is usually the worse possible course of action when it comes to pulling yourself out of a negative debt related situation. Streamlining your payments into a single monthly expense can help you to refocus your financial priorities and to make a concerted effort toward becoming completely debt free in a short period. This effort will only improve your financial standing, making you a candidate for even larger lines of credit..."
Initial Blow
When you enroll in a debt consolidation program, you are essentially borrowing a lump sum of money that is used for the purpose of paying off all your lenders simultaneously. This amounts to many lines of credit being closed in a short period, which in turn causes reporting agencies to drop your score. While this blow may seem negative, it is actually very temporary and your score can be recovered within a few short months of making your streamlined monthly payments on time.
Another way to look at things, though, is to consider the fact that if you continue on in non-payment, your financial score will continue its steady decline anyway. Therefore, the initial jar to your credit score is nothing in comparison to the damage you will likely do your credit score if you continue to try to juggle several monthly payments, which you simply cannot afford.
Steady Recovery
"...Once the negative initial blow is dealt your credit score, debt consolidation programs actually serve to rebuild your credit rating and make you an appealing option for creditors looking to open new lines of consumer credit. When you faithfully make your monthly payments to your consolidation agency, your credit report reflects this in the form of positive credit activity. Over the course of a few months, this positive activity will result in an improved credit score. At first, this will only repair the damage done to your score by enrolling in your plan. However, as time moves forward you will see your credit score improve more swiftly and dramatically..." added A. Lillo.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com
