Consolidating credit card debt affect on credit rating
A better option may be to find a reputable non-profit credit counseling company near you that can enroll you in a debt management plan.
While we try to feature as many credit cards offers on our site as we can maintain (1,200 and counting!When you reduce debt, you restore your credit utilization ratio to where it needs to be.Many of the credit card offers that appear on this site are from companies from which Nerd Wallet receives compensation.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.And the fact that many people do just that is why the action will temporarily cut your rating.In most cases, the consolidation will not even appear on your credit profile, because for all intents and purposes you’re paying your debt off on a schedule you and your creditor agree to follow.
The only reason you get a negative remark on your is if you do something like miss a payment or default on a debt.
What’s more, at the same time, consolidation allows you to pay off your debt quickly so if everything goes right, the completion of your consolidated debt payoff should end with your credit score in a better place than when you started. Credit utilization ratio is a key determining factor in calculating your .
It’s actually one third of the weight of your score calculation.
You get lower payments with less added interest, so you can get out of debt as quickly and affordably as possible. The information below can help you understand what kind of impact debt consolidation can have on your credit profile and credit score.
If you still have questions or need help exploring your options for consolidation, call us at But no matter which option you choose, as long as it’s the right option to fit your needs and financial situation, then the overall impact of debt consolidation on your credit should be positive.
They also can provide budgeting and financial management training and advice to help you along the road to recovery.