Does A Debt Consolidation Service Hurt Or Help Your Credit?

Many people are hesitant about using a debt consolidation service because they are concerned it will hurt their credit score. Something to keep in mind when asking that question, how high is your credit score currently? If you are in a position that you are considering a debt consolidation service, it is probably not very high. If you credit cards are at their limits or possibly over their limits, that is what is hurting your credit score. Making minimum payments, and possibly late payments is also bringing the score down. In some cases credit cards will close your accounts for non payment and that negatively effects your score as well.

Consolidation services do not hurt your FICO score. The fact that you sought a debt counseling service will show on your credit report. Some lenders do not like to see that. They get a little concerned that maybe you were unable to handle your finances, and were on the verge of bankruptcy. You need to take time and rebuild your credit, after you are finished with your debt consolidation plan. In most cases, when you seek out the debt services, you will go through some kind of financial planning course, and should receive a certificate. This may help a potential lender feel more comfortable. Paying off your debts with on time monthly payments will bring your credit score up. The plan to repay your bills, is typically 5 years. A good 5 years of payment history, will prove to potential lenders you are on the path to recovery and can manage your bills. The possibility of becoming debt free with a possible blemish on your credit report is still more ideal than the other option of bankruptcy or a continued mountain of debt.

Finally yet importantly, by researching and then comparing not one but many debit consolidation services, consumers will be able to select the service that meet your your very own financial situation, plus the cheaper interest rate the market is offering. Nevertheless, it is advisable going with a trusted and reputable debit counselor before even make any decision, this way you will save time because of seasoned advise and cash by getting better results in a short span of time.

H. Milla is editor of the Debt Relief Government Grants website – visit and see his best rated debt consolidation service recommendation.

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