Does consolidating debt hurt your credit

Closing credit card accounts lowers your amount of available credit, thereby changing your debt to limit ratio.If you must close certain credit accounts, close only the most recently opened.This means that your total payout on your debt is less with a consolidation loan than if you had remained with many creditors.

does consolidating debt hurt your credit-58

Another type of debt consolidation is one you would get through your mortgage lender – a HELOC or home equity line of credit.

This essentially allows you to borrow money to pay off your debts using your home as collateral.

Credit reporting agencies issue credit scores to all consumers based on your credit history.

Lending institutions use these scores to determine your level of risk on a loan or line of credit.

Taking out a debt consolidation loan can affect your credit score.

A debt consolidation loan affects your credit score in a positive way.

She earned her Bachelor of Science degree in marketing and multinational business from Florida State University and a Master of Business Administration from Nova Southeastern University.

Her work has appeared online at Bill Savings, Money Smart Life and Mortgage Loan.

When you’re ready to give debt consolidation serious consideration, be sure check out Ready For Zero’s debt consolidation tool. Debt consolidation through a debt relief company or bank usually entails this third party negotiating for lower payments or rates on your behalf, sometimes capitalizing on relationships they have already established with your creditor.

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