Are you thinking about a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is three reasons why debt consolidation affects credit ratings in a positive way.
In case you have lots of credit card debt, then it's affecting your credit rating in a negative way. 1 thing that credit card businesses don't tell you is that when you carry a balance on your cards and it is over 25% of your credit limit, then you might be truly penalized on your credit rating, even should you pay your payments on time. So should you consolidate debts that include credit cards with high balances, then you are performing yourself a favor and helping your credit.
You may consolidate not only credit cards, but should you have a vehicle or a personal loan, then when you consolidate those and pay them off you will enhance your credit rating. The credit corporations love to see that you paid off a automobile or a personal loan. It helps to increase your credit score quite a bit.
In the event you have enough debt that you're thinking about consolidating it, then it's obvious that you should. The key is that should you consolidate your debt and payoff credit cards, then you have to stop using the credit cards and get rid of them. Should you consolidate your debts and then you run your credit cards back up to their limits you're doing nothing to assist your self. You'll end up in a worse situation, then you were in to start with.
So if you're thinking about consolidating your debts keep in mind that debt consolidation will affect your credit rating and it could be in a positive way if you are responsible and smart together with your debt consolidation.