Question by missjones2you: Is Debt Consolidation a good thing for my credit score or will it damage it ?
Being a recent grad and not in my prefered area of employment is rough, as it is for many recent grads. My dilemma is my finances. My poor financial decisions (i.e. CREDIT CARD DEBT) in college has caught up with me and it is racking my brain. I have considered debt consolidation because of the seemingly positive benefits of reducing my payments and paying just one bill…BUT is it too good to be true? It seems that there are quite a few debt consolidation businesses popping up and that is cause enough to sit up and really ask what’s really going on. I mean, is it really good for my credit (as well as my mental well-being)? Am I better off just toughin it out or should I take the leap and just take a chance with a reputable debt consolidation company? What’s a poor girl to do?
Best answer:
Answer by boonestudent18
This may not be true of all debt consolidation firms, but with everyone I see, you end up paying about 200% more than what you owe over the course of a longer period. Don’t do it. I don’t know how it would affect your credit score, but I doubt that it would be good.
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A credit consolidation is initially damaging at first because normally creditors settle for less than what you owe. But after you have completed the program and start building your credit again, it will get better.
My suggestion is to first pay off high credit card debts, or if you decide to gat a consolidation loan, make sure you pay off the full amount that you awe, and that you DO NOT close those accounts, just CUT the credit cards.
Closing accounts will decrease your credit score dramatically.
Don’t go there. Call your credit card company and negotiate the interest rate. They will usually work with you and drop it way down as low as 6 percent if you are tough about it. Then pay off as soon as possible. Other wise you got a snow ball that will roll up bigger and bigger. Just use the rule of 72, what you do is divide the interest rate by 72. If it is 12 percent then 72/12 equals 6 and your debt doubles in six years. That means you got to get the interest rate down and pay it off with a dead line. Good luck!
consolidation is not your first choice as it may incur admin charges plus a high rate of interest, seek guidence from organisations like the C A B who are independant and non profit operators. All debts can be renegotiated with positive results.