While debt consolidation is mainly a method of lowering or eliminating mounting debt, it can also have a positive effect on your credit score.
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It is important to make sure that your credit counseling organization makes all payments for you on time.
Credit counseling organizations typically make the agreed-upon debt payments for you each month, and so the responsibility is on them to make sure they pay each bill on time.
Payment history is the most important factor in calculating your credit score—accounting for 35% of your FICOWith a debt consolidation loan, it is important to first know what range your credit score falls into.
For people with a "poor" credit score it may be difficult to get approved for a new loan to use for consolidation.
Consolidating your bills will help you reduce bill clutter, and will possibly provide lower rates. P2P Credit makes applying for a debt consolidation loan hassle free.
Simply click apply, select your estimated credit score, and provide some basic information about your financial situation.
If the balance on that card is ,000, your credit utilization ratio is 50%.
It is commonly recommended to keep your credit utilization under 30%.
Debt consolidation has the potential to help or hurt your credit score—depending on which method you use and how diligent you are with your repayment plan.
The strategy is considered in situations where people want to streamline the repayment of multiple high-interest debt amounts—often with the hopes of saving money and lowering their debt burden.
Credit counseling organizations are typically non-profits that exist to advise people on how to manage their money and establish budgets.