Will debt consolidation hurt my credit?
475506
YES!!! \nDont do it.  My wife and I did it and when we went to buy a new car it showed up on our credit report.  It wasnt as bad as a bankrupcy but it did put a negative hash on it.  We were still able to get the new car loan but it really mad me mad at myself for not looking into that first.  Should have just paid them off by myself.
843276
If your student loans are currently deferred (not required to make payments) for more than 1 year, it's possible to exclude them from your debt ratios under FHA and VA loan programs.\n\nAlmost all other loan products will require that they count against you, whether you are currently making payments or not.\n\nAnd they will all affect your credit rating.  In fact, student loans can be particularly dangerous after you've consolidated them.  Even after consolidation, usually you will still have multiple underlying accounts being reported to the credit bureaus.  Miss one consolidated payment, and you could show multiple late payments on your credit report.  Ouch.
268916
Not if you close the old account.  If you keep it open, it will add to your "available" credit and lower your score.
801164
Yes, someone running your credit report will see that you had gone for a period of time not paying your bills properly.  But the longer you don't pay, the worse the situation gets.  There is a rule call "The 5 C's of Credit", character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).  By paying your bills again, you are re-establishing "Character", owing up to your debt.  As long as your credit cards are not maxed out, you could look at trying to consolidate some of the bills by transferring some of your smaller balances to other cards.  Some of the cards may offer a short term interest rate on the transfer, and if not, as long as the interest rates aren't that much different, it may be a short term option to consolidate some of your debt.  \n\nBut let's say you can't consolidate because your cards are maxed or they won't let you because you hadn't been paying your bills.  Write down all your debts from smallest to largest and next to that, list the minimum payments.  Look at all the money you can pay to your debt, subtract your minimum payments beginning with your largest debt until you get to the smallest.  The entire balance of what is left over, throw it to your smallest debt.  Once you pay that off, you will have one less bill to pay.  PLUS, all the additional money you had to pay off the smaller bill will increase since you can add the minimum payment, from the now paid bill, to that overage amount.  Then continue to throw all the extra bill money to the smallest bill until they are all paid off.  Paying the minimum on all and throwing the extra to the largest will just keep your finances spread out forever since most of your extra money to the largest bill is just getting eaten up by card interest.  Paying off even the smallest bills will help your credit since you now have less debt and fewer bills over your head.\n\nIf, by chance, you subtract your monthly allowance to pay bills and you are coming up short to meet all the minimums...you may have to call the credit companies and work out a plan with them to minimize your payments for a short period of time.  This may result in you having to freeze or cancel a card or two to get this agreement done.  But, in your situation, cancelling a card or two may not be a bad thing in the long run.
35294
Yes, it can affect your credit rating if the unpaid bills are reported to one of the credit reporting agencies. A poor credit rating can affect your ability to obtain further credit, and can affect your ability to obtain some jobs where your creditworthiness may be a factor in assessing your reliability for a job. A bad credit rating can also make it more difficult for you to obtain insurance or you may pay higher rates (happens for car insurance, for example). \n\nIf you are having difficulty with debt consider talking to a debt counselor. More details at:\nhttp://www.bankrate.com/brm/news/cc/20040806d1.asp
968889
If at all possible, go to your bank. They may be willing to give you a loan which means that you can pay your debt off with one automatic payment a month. I did this and I was amazed that they said 'yes'!\n\nOf course, this doesn't make the debt go away, you've still got to pay it back. The smart thing to do is get a grip on your finances, don't get into any more debt, and aim to pay the bank back quicker than they want you to.\n\nIf the bank isn't an option, then there's a website here with lots of information, pros and cons of debt consolidation. If you go down this route it really does pay you to do your own research and shop around.\n\nGood luck!
1144313
In addition to the answers already noted, here are some other reasons:\n\n~ the interest rates on consolidated student loans is tax deductible, whihc may lower your "real" cost of borrowing\n\n~ with consolidation, you may be able to extend your repayment period to give you more time to pay back your loans without fear of default or hurting your credit rating.\n\n~ speaking of credit rating, by consolidating your student loans into a single loan, you can effectively decrease the number of creditors on your credit history, thereby enhancing your overall credit score.
978354
Your credit score won't be affected unless you make late payments.  You're okay.\n\nGood Luck!
877860
Deborah,\n\nHave you tried to switch the cards to lower interest cards, presumably  your credit rating is okay ? so try applying for cards with lower rates on the interest and then switching to those cards, cards like capitalone.com who might be able to give a limit that allows you to get rid of some of the cards down to say three or four.   Presumably you need at least one or two cards so thats an option.\n\nAnother suggestions is take a  look in the financial pages of the "Daily Mirror/Mail" there are always loan firms advertsing in there for debt consolidation loans, do it while you are able to before things get out of hand. Sounds like you are having a bit if a struggle there.
671118
Determining if consolidation loans are the right decision for you requires serious thought. As with any decision of magnitude, carefully weighing the pros and cons is important.\n\nLet’s explore the pros and cons of this type of debt solution.\n\nPros:\n\nOne payment versus many payments: The average citizen of the USA pays 11 different creditors every month. Making one single payment is much easier than figuring out who should get paid how much and when. This makes managing your finances much easier.\n\nReduced interest rates: Since the most common type of debt consolidation loan is the home equity loan, also called a second mortgage, the interest rates will be lower than most consumer debt interest rates. Your mortgage is a secured debt. This means that they have something they can take from you if you do not make your payment. Credit cards are unsecured loans. They have nothing except your word and your history. Since this is the case, unsecured loans typically have higher interest rates.\n\nLower monthly payments: Since the interest rate is lower and because you have one payment vs many, the amount you have to pay per month is typically decreased significantly.\n\nOnly one creditor: With a consolidated loan, you only have one creditor to deal with. If there are any problems or issues, you will only have to make one call instead of several. Once again, this simply makes controlling your finances much easier.\n\nTax Breaks: Interest paid to a credit card is money down the drain. Interest paid to a mortgage can be used as a tax write-off. \n\n\nSounds great, doesn’t it? Before you run out and get a debt consolidation loan, let’s look at the other side of the picture – the cons.\n\nCons:\n\nEasy to get into further debt: With an easier load to bear and more money left over at the end of the month, it might be easy to start using your credit cards again or continuing spending habits that got you into such credit card debt in the first place.\n\nLonger time to pay off: Most mortgages are the 10 to 30 year variety. This means that rather than spend a couple of years getting out of credit card debt, you will be spending the length of your mortgage getting out of debt.\n\nSpend more over the long haul: Even though the interest rate is less, if you take the loan out over a 30 year period, you may end up spending more than you would have if you had kept each individual loan.\n\nYou can lose everything: Consolidation loans are secured loans. If you didn’t pay an unsecured credit card loan, it would give you a bad rating but your home would still be secure. If you do not pay a secured loan, they will take away whatever secured the loan. In most cases, this is your home. \n\nAs you can see, consolidated loans are not for everyone. Before you make a decision, you must realistically look at the pros and cons to determine if this is the right decision for you.
1106777
Debt Consolidation is only worth it if and only if you can get the lowest interest on it, and you have the means to pay at least the interest and bit of the principal on it. Do not get a debt consolidation if the institution asked for collateral (your house or lean against any of your asset-or equity). The reason is because credit card debt is unsecured debt, whereas when you put your asset to get a loan, you are putting your asset at risk. When you missed a payment or two, the institution has the right to call the loan and hence because you put your asset as a collateral, the asset can be auction/sold at the request of the institution. Read the fine print on the debt consolidation. Make sure the interest rate is the lowest through out the entire loan, some fine print will said 5% interest for the first 6 months and thereafter 17%. ( you are worst off!). Do your due diligent.\n\nYou will only save the interest payment on debt consolidation which is helpful in a way as you will pay the interest payment against the principal had you not consolidate your debt.\n\nBottomline, budget and watch your spending.
358189
of course, your credit will go down by some point initially but you can cover it up in few months paying your monthly payments on time. The best way to save your credit at time of refinancing is to consolidate some debts if you have like your car loans, credit cards or personal loans etc. this will stop your credit to go down by some points. Moreover if you pay high closing cost that will affect your credit less as compare to low closing cost.\nHope you got the answer you were looking for.\nThanks and Good luck
910666
If it goes past due...it will hurt your credit score. Ask them if you can make an interest only payment...that should help with a little extra cash and also not hurt your credit. If they agree, make sure you first ask if they will report it as a delinquent payment.\n\nMike\n\n================
308406
Yeah-- don't fall for that "consolidation" stuff. It'll damage your credit.\n\nIt's all about the interest rate. Figure out what interest rate you are paying on your cards and try to get the balance(s) all transferred to the lower rate.\n\nA lot of credit card companies try to get you to use them by hooking you in with a zero or low rate for balance transfers. Get one of these offers and transfer all your balances to it. And don't put any purchases on that card! If you put a purchase on it, the zero interest rate no longer applies and won't until the entire balance is paid off.\n\nYou might not be able to get another card. If not, just pay the larger interest cards off first. If interest rates are the same, it doesn't matter if you pay on a bunch of cards or one-- you end up paying the same. It's a hassle to make more than one payment, though.\n\nJust play the rates-- pay higher rates off first; shop around for transferring to a lower-rate card or offer.\n\nGood luck!
479053
The best way to consolidate your credit cards is through www.debtscape.org   I have been using it for 4 years now and I have less than a year to go and I started out with over $30,000 in debt! \n\nYou can tell them I sent you\n\nTraci Sorgi\n\nPS never close your accounts after they are paid, you will have to establish credit all over again, and it will be hard to do this with NO credit!
112859
If you have satisfied the debt and it's showing a $0 balance, that is not an inaccuracy.\n\nIt also does not bring down your score unless your payment history for that account show slow pays beyond 30, 60 and 90 days.  Additionally, it also brings down your score even if you paid down the account if the payment was received in response to a collection or a chargeoff.\n\nAlso, the reporting of a credit account does not, by itself, bring down your credit score.  Other factors come into play such as\n\n1) How old your credit history is.  \n2) What types of credit you have/had: revolving (credit cards, etc), installment (car loans typically), real estate (mortgages).\n3) Your repayment history and whether your accounts are paid as agreed or whether there have been slow pays\n4) Whether there have been garnishments, collections, liens, bankruptcies\n5) How many inquiries have been made in the past few months (i.e. have you been applying for loans all over town or trying to get credit cards)\n\nUnfortunately, I think you're out of luck on this one.  \n\nUnless you have grounds to have those accounts removed (e.g. that wasn't your account, the payment history is inaccurate), they will continue to be reported for about 5-7 years.  \n\nThe reason for this is that, before approving your credit application, creditors want to know how well you repay credit lines and loans in the past, not just the accounts with open balances.  They also want to know if you're carrying too much debt.
992150
I am unsure where Californian99 obtained his information, but debt consolidation companies are actually a very good way for individuals drowning in debt to get some breathing space. It is true than when debt consolidation companies were unregulated, many of the smaller ones took advantage of people's desperate situations, but this is NO LONGER the case. There are many larger companies now that are endorsed by regulation agencies and the one that I worked for even had a contract with the Defense Department in order to refer financially struggling soldiers for counseling. In fact a year or so back, when you heard all that news about the changing rules of Bankruptcy filings, one of the big changes was that individuals were to try to appease their debts through debt consolidation counseling before they were allowed to file. I admit that I am currently on the program, and it has helped me tremendously. Here's the basics on how they work:\n1) You have lots of high interest debt. Perhaps you fell behind on some credit cards or private loans, and the late fees and high interest rates are making it very difficult for you to make any progress. With my case, I was always on time, but I wanted to make a change in my life and rid myself of my high interest debt.\n2) you call a credit couneling company. I can't speak for all companies, but at the one I worked for we were trained to counsel the clients. To show care and compassion because they were in some difficult situations. This is sometimes all someone needs. Someone to just listen to, but if the counselor finds that a debt consolidation WILL help, then they will walk you step by step through the program.\n3) Okay so you qualify now what? You enroll your high interest debt into the program and the company will begin contacting your creditors to negotiate lower interest rates on most of your accounts. This is a tremendous help because interest consumes most of your monthly payment anyways. Another important thing that you have to remember is that the creditors also CLOSE your accounts. This is to further help you along in paying off your debts.\n4) You stay in contact with your consolidation company and creditors. But you only make ONE payment to the consolidation company, who in turn forward it to your creditors. \n5) Sit back and watch your debt slowly disappear!\n\nI think that the reason the person before felt so strongly against it is because he has never done it himself and has heard it from a friend of a friend. Also I found many consumers just left the accounts alone thinking the company was taking care of business. But you have to remember when you consolidate with a reputable company, they will encourage you to monitor your statements and call them if you see a fee that shouldn't be there. \n\nSo if you are interested in the company I worked for, it is http://www.incharge.org . If you are interested in the company I have an account with, it is http://www.careonecredit.org/ . Both of these companies are registered with the BBB and have outstanding reputations. The good part is they are also non-profit. They do ask for a monthly donation with your payment, which goes to paying for the counselor's salaries, but you can always decline it if you are really in a bind. I pay it greatfully because they have helped me so much. Anyways, good luck with your research!