If you are considering how to consolidate your credit card debt without hurting your score, there are many options available to you. However, if your credit is already suffering from multiple credit card bills, you should choose the option that will not affect your score. This way, you can avoid paying interest on your debt, which can hurt your credit. You should also make sure that you keep the balances on your credit cards low so that you won’t be charged extra interest. And don’t open new credit cards. Otherwise, you risk accumulating more debt.
It’s tempting to apply for another credit card or loan when you’re consolidating your debt, but it can actually have the opposite effect. Applying for too many lines of credit could result in a large number of inquiries on your report, which will bring your credit score down. Instead, make a single application for a consolidation loan or balance transfer credit card, and make sure that you pay it off on time.
While it is possible to consolidate your debt with a personal loan or home equity loan, it can actually lower your credit score. This is because you’ll be required to open a new account to make your payments and reduce your overall credit utilization ratio. In addition, you’ll need to stop using your credit cards and update your budget. You might need to apply for another loan or balance transfer credit card to get this done.
Using a debt consolidation service to consolidate your credit card debt can significantly lower your interest costs and reduce your monthly payment. It can also lower your payoff period. While it can temporarily dip your credit score, it will improve over time if you pay your debts on time and in full. And while a consolidation loan can damage your credit score, it’s a good option if you want to avoid a big financial mess.
In the present financial crisis, a credit card consolidation loan is especially helpful. The Federal Reserve has recently lowered interest rates to encourage borrowing in the economy. Its Federal Funds Rate, or FFR, is now between 0.00 and 0.25 percent. With these lower interest rates, you can consolidate your debt and get out of debt faster. But be sure to choose the option that is right for you.
Besides applying for a debt consolidation loan, you can also make use of a debt management plan. These debt consolidation services roll up your multiple debts into one low monthly payment with a lower interest rate. These debt management plans are most effective for those with low credit scores, but if your debt is too large, you should contact a nonprofit consumer credit counseling agency to find out if a consolidation loan will help you. You will usually qualify for a debt management plan if your income is sufficient to make your payments on time.
Another way to consolidate credit card debt without hurting the score is to contact your credit card company directly. Calling them is free and you can use the phone number listed on your card or statement. Be persistent and polite when dealing with these companies. Keep a record of all your debts and discuss a reduced payment plan with them. This can save you money and prevent you from being sent to collections.