How does consolidating affect your credit
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Moving the balances of your credit card accounts into an installment loan for purposes of consolidation may cause a slight drop in your credit score.
Without taking these positive money-management steps, consolidating your debt will not help your credit rating in the long run but could create the potential for disaster instead.
In addition, your spending plan will help you determine if you can afford to consolidate your credit card debt.
The answer depends on how you consolidate and what you do with your debt afterward.
Getting a new loan to pay off other debts is the most popular way to consolidate.
Should you need to cut back on expenses in other areas to afford the consolidation loan payment, be sure you’re willing to make the needed sacrifices for the entire 5-year repayment period, and be doubly sure you don’t use those cards unless you can pay them off in full each month!
If you don’t know why or how you amassed ,000 in credit card debt, begin there.
The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.
The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the chance to begin adding to your credit card balances again.
The cliche about rearranging the deck chairs on the Titanic came to mind when I read your question.
Debt consolidation won’t address the real problems that may sink your credit rating!