Does Consolidation of Credit Cards Lower Credit Score?

Posted on July 20, 2009
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Thousands of people all over the country are facing financial hardship and considering consolidating their credit card debts to get out from under the money they owe. If you're thinking about this option, there are a number of things to consider, including the potential impact it can have on your credit score.

debt consolidation does a number of things for a consumer, some of which can negatively affect your credit score. On the other hand, consolidating your credit card debt can also do a number of beneficial things for your credit history, including lowering your debt to income ratio, a factor that plays a large part in your credit score.

One of the largest things debt consolidating does that can hurt your credit is settling your debt for a fraction of what you owe. This is one of the biggest reasons people use debt consolidation companies: they have too much debt and can't afford to pay it all. It's important to keep in mind that this reduction of what you owe will show up on your credit history negatively, although it's usually worth it for many individuals with too much debt. That's why it's important to carefully consider how much you owe and your ability to pay before you decide to consolidate credit card debt.

A positive thing that debt consolidating can do for your credit score, in addition to lowering your debt to income ratio, is lowering the total amount of creditors you owe. Having a great number of credit lines open can hurt your score and most debt consolidation companies will assist you by closing all of your accounts and paying them off for you. This will mean that you will only have a single credit line open instead of many.

If you're considering consolidating your credit card debt but you're afraid of the impact on your credit score, remember that the benefits far outweigh the negatives for many individuals. Your credit score may go down in the short term, but getting out of debt and paying off what you owe will benefit you and improve your score in the long run.

By the way, there certainly are reputable debt consolidation companies in the market, so you must research and compare several services in order to to determine the one that meets your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and trusted debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.

Hector Milla runs the Reputable debt consolidation Company website – where you can see his best rated debt consolidation company recommendation.

Visit for further information and read our full review of the best debt consolidation service, plus articles and video training about how to get the most of your debt consolidation process.

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