Saturday, May 25, 2013
What Does Debt Consolidation Services Do to Your Credit Score
Consulting for debt consolidation services does not affect your credit score. However, if you access the debt consolidation loan, your credit score is affected. Many creditors will tell you its better than being bankrupt since you will be able to recover the scores if you choose to consolidate your debts in the right manner.
This is because credit score is determined by the number of debts you have, in this case, the debt consolidation services will have combined all your many debts into one big debt hence your credit report will be good. This will enable you raise the scores faster in the long run. The credit report will show that you have paid for most of your debts hence lenders will consider you for you have managed to pay many accounts fully.
To maintain this positive effect on your credit score you should ensure you pay your new credit on time. To raise the credit scores will be hard since history payments are required hence you will be required to keep up to date all the payments you make so as to be able to improve your credit score.
However, if you miss to pay for the consolidation services, your credit score will be negatively affected as it goes down. You will have to keep up the debt consolation loan payment and any other credit payments you are supposed to make to keep your credit scores from dropping.
You should not close credit accounts after consolidating the debts. These credit cards give long credit history and closing them implies you are trying to escape your responsibility. Only after you have cleared the debts should you close them.
Using a debt settlement program to consolidate your debts when the method allows you to negotiate for the reduction of the bills you owe will negatively affect your credit scoring. However, if you manage to use the debt consolidation services properly, your credit rating will be affected positively. The reverse is also true.
By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meets your specific financial situation. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.
Hector Milla runs the Best Debt Consolidation Service website - where you can see his best rated debt consolidation service recommendation.
Visit for further information and read our full review of the best debt consolidation company, plus articles and video training about how to get the most of your debt settlement process.
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