Consolidating debt credit score
If you make use of a balance transfer offer and move all your balances to a new credit card, you will immediately increase your total credit limit.Using the example above, let’s say you transferred your three credit card balances onto a new card.However, if you think you might be tempted to continue racking up credit card purchases after doing debt consolidation, then you have to make a harder decision.If you can find a debt consolidation loan that will help you pay off your debt through lower interest rates or lower monthly payments then you should probably do it – and close your old credit cards despite the potential negative impact on your credit score.” To answer that, you need to understand how credit reports and credit scores work.If you’re not familiar with the process, here’s a very brief explanation: Your credit report contains information about all the credit accounts you’ve ever had, including mortgages, auto loans, credit cards, student loans, etc.This is why it’s important to know yourself and be realistic about your future behavior.
However, this small hit to your credit is not necessarily a reason not to do debt consolidation.Of course the problem is that there is an inherent temptation in leaving those cards open. Check your rate using Ready For Zero's free debt consolidation tool.People have saved thousands by consolidating higher-interest debts using a single, personal loan, this will not negatively impact your credit. Can you predict whether you’ll be tempted to spend more money if you suddenly have more credit available?And for further reading, check out our article, “Is Debt Consolidation a Good Idea?While some may believe that deb consolidation is something to avoid, it is actually very good news for your credit score.