PostHeaderIcon does a debt consolidation loan effect your credit?


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I have heard that this is not a good thing, or that lenders do not like to see this. I am sure it does not impact my score though. Someone please set the record straight.

7 Responses to “does a debt consolidation loan effect your credit?”

  • Reaper says:

    NO it doesn’t at all !

  • Sara G says:

    The formulas for credit scores are very tricky. How you get the debt consolidation loan and what you do with it, will affect if lenders approve you for other loans/lines in the future.

    If you open a new loan to consolidate debt, your credit will be “dinged” slightly because 1) you’re increasing your debt load and 2) a lender or two probably made inquiries into your credit worthiness. It shouldn’t be too bad.

    A lender will be concerned though if they see that you had high debt and consolidated that debt in order to open new loans and increase your debt even more. They’ll wonder why you’re consolidating debt instead of paying it off and may see you as a risk because you are not decreasing overall debt.

    If you’re sure that you’re not digging yourself into a hole you can’t get out of, and if you have a valid reason for taking more on (starting a new business, sending a child to college, etc) tell your loan officer, they’ll help you get approved. If you’re worried about your credit for other reasons, hold off on the consolidation until you can pay things off, then consolidate a smaller amount.

  • jpocia03 says:

    DEBT CONSOLIDATION DOES AFFECT YOUR CREDIT.

    These people answering are chuckle heads.

    Lenders view debt consolidation the same as a CHAPTER 13. IT DOES SHOW ON YOUR CREDIT REPORT. In addition, you need to be making payments to this company. In the meantime, they are negotiating with your creditors, and will not be applying the payments right away. So the creditors will report you not paying on time, which will drop your score even more.

    Let me know if you have any other questions. Just believe me, I do know what I am talking about.

  • S P says:

    Let me add on to these reponses as well on affecting your credit. As well as affecting your credit, which debt consolidation does affect it, any major credit card company that you have a credit card through will close your account. My ex husband had american express, as soon as he opened the debt consolidation and it was reported to the credit bureau, they closed the credit card account. So, yes, it does affect your credit. Now consolidating is a way to get yourself back on track and clear up the debt you have created. Be very careful who you deal with and what you are signing.

    Good Luck!

  • Ankyonline001 says:

    it depends on your need

  • netdebt1 says:

    The short answer is Yes. Only do this if it is necessary to avoid going delinquent and you are achieving a much lower rate.

  • Debt Guru says:

    Debt consolidation services can help you consolidate your varying debt into one manageable payment and even establish a payment schedule for you and your creditors. Typically, debt consolidation services such as credit counseling or debt settlement are alternative debt help options, in contrast to a debt consolidation loan or borrowing to pay off debt.

    First, make sure that a debt consolidation service is what you need. Do you own your home and have equity? If so, maybe a debt consolidation loan would be right for you. Evaluate your priorities: is a low monthly payment the most important factor? If so, debt settlement might be your best option. Afraid of collection calls or your credit score impact? in that situation, credit counseling could be your optimal debt consolidation service. And finally, you need to research the debt consolidation service at various consumer protection offices, including the Better Business Bureau (BBB). This will give you an idea how honest and reliable their services really are.

    There is a chance that using debt consolidation services might affect your credit. Some debt management programs, like credit counseling, show up on your credit report. Some solutions, like debt settlement, don’t show up on your credit report, but by definition cause late payments. Most debt consolidation services are there to help you get out of debt, not to sustain your credit report or credit score, so you should priorotize what you really want in seeking debt consolidation help.

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