Does consolidating debt affect credit
In fact, you are entitled to one free report each year.
Will it lend a helping hand or kick you when you’re down? While the basic principle behind debt consolidation – taking debts and combining them into one, hopefully more manageable debt – is essentially all the same, there are different ways to go about it.In addition, this third party may require that you close any open credit cards as part of your agreement, impacting the credit score itself.Whether you’re opting for a balance transfer or HELOC, one of the factors used in determining your credit worthiness is your past credit history.However, it’s incredibly important to do your research with your particular situation in mind when you’re choosing which route to take.Clearly some choices pack a bigger negative punch than others.If you’re ready to give debt consolidation a try, please use our secure debt consolidation tool.
When debt piles up, you have several options for paying it back, including debt consolidation.
[Learn More: Easy Way to Improve Your Credit] The way debt consolidation affects your credit depends on the various options you choose.
Whether you opt for a loan or a credit card, you’re applying for new credit and that means a “hard” inquiry into your credit. Quick Tip: Before start your consolidation plan, check your free credit score online, without impacting your credit report card.
With that in mind, if you opt for a balance transfer of your credit card debt onto a new card, leaving your other cards open in the process, you may see an uptick in your score. You’ve raised the amount available to you, but kept the amount charged the same.
If, on the other hand, you close the old cards after opening the new one, you would likely see a dip because you actually lowered that available credit ceiling.
In terms of a debt consolidation loan from third party, the impact on your credit could come more from someone determining your credit rating (the variety of issues affecting your credit worthiness) versus a hard impact to your credit score (a 3 digit number calculated a variety of ways depending on the reporting agency).