Debt-Consolidation | Financial Trend Blog

Does Debt Consolidation Affect Credit Rating?

Are you considering a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is 3 reasons why debt consolidation affects credit ratings in a positive way.

Tip #1

Debt Consolidation

If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card companies don’t tell you is that if you carry a balance on your cards and it is over 25% of your credit limit, then you are actually penalized on your credit rating, even if you pay your payments on time. So if you consolidate debts that include credit cards with high balances, then you are doing yourself a favor and helping your credit.

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Debt Management – Can It Hurt Your Credit Score?

A Debt Management Plan (DMP) is a confidential program individually designed to provide you with a unique solution for your financial situation. DMPs assess your financial situation, assist in creating a spending/budget plan, and negotiate the terms of your debts with your creditors. They provide you with more affordable payments, a shorter payoff period and consolidate all of your unsecured debts into one convenient monthly deposit that will be disbursed directly to your creditors.

Although tens of thousands of individuals and families have been helped to get out of debt and regain financial stability, a lot of people are afraid that using a DMP might hurt their credit score. This is just misinformation. Enrolling a debt-management plan to pay off debt won't hurt your credit score, but might make it difficult to qualify for new credit as long as the plan lasts.

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