Debt consolidation companies are everywhere and many of them can actually make a deal with your credit card companies to substantially lower or eliminate the debt you have built up by using your credit cards. As you consider working with a debt consolidation firm, you have good reason to worry that your credit score may be made worse in the process. If your debt-to-income ratio is too high, your credit score may be so adversely affected that potential lenders will pass you up just when you need another loan in the future.
Credit card debt is one of the worst kinds of common debt because the rates of interest charged are so high and the minimum payments required are so low that an individual may be sinking further and further into a debt spiral even as they are making their monthly payments on time. The minimum required payments may not even cover the interest on the loan, so when the payment time rolls around again the next month, the individual owes even more than they owed the previous month.
If you are a person who has proved you are able to make timely payments, consolidation can be a positive way to reduce your credit card debt which greatly lowers your debt-to-income ratio while raising your overall credit score.
Conversely, if your payments are up to date and your score is suffering only from your debt to income ratio, consolidating can improve your credit score. The debt will be paid off much sooner and your rating will go up.
You can save huge amounts of money by taking a debt consolidation loan at a lower interest rate than your debtors offer you. By this you can pay off the debt much sooner and the pay off will be quicker than you realized. You will be able to save lots of money payments which other wise would have to be paid as interests.
You can otherwise take out an equity loan to consolidate your credit card debtors with the lowest interest rate and can make your income to debt ratio lower. Your home loan will absorb $15000 in debt easily as it is listed on your credit report as additional debt with high interest payments.
Your credit rating is an asset that you should want to maintain and grow, so examine all your options before taking what looks like an easy way out of your current financial crisis. - 29904
Credit card debt is one of the worst kinds of common debt because the rates of interest charged are so high and the minimum payments required are so low that an individual may be sinking further and further into a debt spiral even as they are making their monthly payments on time. The minimum required payments may not even cover the interest on the loan, so when the payment time rolls around again the next month, the individual owes even more than they owed the previous month.
If you are a person who has proved you are able to make timely payments, consolidation can be a positive way to reduce your credit card debt which greatly lowers your debt-to-income ratio while raising your overall credit score.
Conversely, if your payments are up to date and your score is suffering only from your debt to income ratio, consolidating can improve your credit score. The debt will be paid off much sooner and your rating will go up.
You can save huge amounts of money by taking a debt consolidation loan at a lower interest rate than your debtors offer you. By this you can pay off the debt much sooner and the pay off will be quicker than you realized. You will be able to save lots of money payments which other wise would have to be paid as interests.
You can otherwise take out an equity loan to consolidate your credit card debtors with the lowest interest rate and can make your income to debt ratio lower. Your home loan will absorb $15000 in debt easily as it is listed on your credit report as additional debt with high interest payments.
Your credit rating is an asset that you should want to maintain and grow, so examine all your options before taking what looks like an easy way out of your current financial crisis. - 29904
About the Author:
Layla Vanderbilt is the content coordinator for a leading website that offers for debt consolidation advice and guidance.
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