Skip to content

Credit Absolute

Will consolidating your debt help your credit score?

Will Consolidating Your Debt Help Your Credit Score?

From juggling multiple credit cards to your home’s mortgage, car payments, and student loans, dealing with debt can be stressful. As you make decisions to help manage your finances, you may consider consolidating some or all of your debt into one convenient payment. There are many benefits to combining your debt; like the opportunity to give your credit score a positive boost and remove strain from your financial obligations.

Debt Consolidation Non-Credit Benefits

Debt ConsolidationCombining multiple debts into a single consolidation loan isn’t just beneficial to your credit score; it can also make your monthly financial obligations more manageable.

First, having your debt spread across multiple accounts exposes you to a lot of different interest rates and agreements. With the most common credit card interest rate averaging at 15%, this could mean shelling out hundreds of dollars a year or even months in interest alone. Making the decision to consolidate your debt into a 0% APR card or a personal loan can cut down on unnecessary finance costs. Many borrowers even use the money that they save to eliminate their balances even faster.

The second advantage to debt consolidation is moving your monthly payments from multiple accounts to just one. This can simplify your financial life by making it easier to budget and manage debt.

Debt Consolidation Credit Benefits

Besides taking the strain off of your monthly financial responsibilities, consolidating your credit card and other debts to a single account can boost your credit score. If you make the decision to consolidate your debt to a personal loan, your score can experience a jump in as little as a few months.

The reason behind this has to do with credit utilization. In most credit score models, credit utilization determines as much as 30% of your credit score. Credit utilization is the ratio between your debt and your available credit. If you have several cards that are maxed out, your credit utilization is likely hurting your score.

However, only balances on revolving lines of credit are factored into your credit utilization ratio. Moving credit card debt to a personal loan will shift your obligations in such a way that there will be a minimal amount of impact on your credit, in addition to improving utilization on your cards. This type of debt consolidation will likely improve your score.

Considerations

Before you make the decision to consolidate your credit card debt, it’s important to take several things into account. First, how is your credit score? If your score is less than average, it may be difficult to qualify for a reasonable interest rate on a personal loan or a 0% APR card.

Second, it’s a good idea to take a look at the fees involved. Personal loans still come with their own terms and costs, and most lenders charge a balance transfer fee in order to transfer debts to a 0% card. Consider these fees and conditions before you decide if debt consolidation is the right move for you.

Last but not least, ask yourself if you have genuinely changed your ways. The need for debt consolidation often signals an even bigger problem or habit, such as overspending on credit cards. Examine your spending habits and make the necessary changes. Keep in mind that if you consolidate your debt and miss a payment, the agreement with your lender may become void and you’ll be required to pay regular interest rates right away.

Consolidating your revolving debt can be a great way to raise your credit score fast. However, like any other financial decision, you’ll want to consider your habits, financial capability, and benefits before moving forward.

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

« Previous Post

What Criteria is Required for a Business Loan

Next Post »

How to Get a Lower Interest Rate on Your Next Car

Request a Credit Audit & Receive Our Free E-Book

David Burgess
David Burgess
19:02 20 Aug 19
Derick and his team have been extremely helpful and informative throughout this entire process. I would recommend to anyone who wants/needs to repair credit quickly! Worth more than the money without question!
steve moore
steve moore
23:32 16 Aug 19
Derick and his team were awesome! I would highly recommend their services if you are looking to refurbish your credit score!!! +A all around for his team and the willingness to help me out !
Zacary Roberts
Zacary Roberts
03:00 26 Jul 19
Felicia helped me out so much, the company is professional l, but they treat you like your their only client. They are thorough and honest and my credit score has gone up remarkably ever since I started working with them. Thank you so much!
Chris Gunn
Chris Gunn
18:50 25 Jul 19
Good folks. Money well spent. Their service works! I finally got my credit straightened out to where I could buy a home because of them.
Christy Russell
Christy Russell
15:37 25 Jul 19
This company provides a great service! Friendly staff, plain-spoken, direct, no nonsense. They really make you feel like they care. Simple and straight-forward approach. They analyze your credit report and quickly make a plan to step-by-step repair any flags. I highly recommend their program.
Christian Wunder
Christian Wunder
19:35 18 Jul 19
They have been great to work with. Going on 3 months now and my score has taken a huge jump. I've had items removed from my credit and every month we go over our strategy to maximize the improvements. Highly recommend :)
Baron Adelmann
Baron Adelmann
21:59 26 Oct 17
Derick and his team have helped me tremendously! He explains the process of improving your credit and does all of the work for you! My credit score has improved drastically and I know that I couldn't have done it without the help of Credit Absolute. Because of them, my business has continued to thrive in a way I never thought possible. Thank you Derick and the Credit Absolute Team!
Gabriela Lovelace
Gabriela Lovelace
23:17 30 Jun 17
I want to thank the wonderful team of Credit Absolute for all the work they did in help me clean my credit! They have teach me how to keep my credit clean and how to make it grow! I will be their customer for life and I recommend to anyone who needs help with their credit! Credit Absolute you are awesome!!!!
Sho Sho Smith
Sho Sho Smith
22:31 16 Feb 17
Derek just made my day when I thought my credit was being compromised due to a balance on my late husband's credit card. He checked it out my credit health and assured me that I lost no points and the balance was forgiven. Great news! He gave me pointers on how to get my credit score even higher to put me into the premium level and coached me on getting back on my feet, credit-wise, after my husband's death. A great experience!
Vanity Hernandez
Vanity Hernandez
20:15 19 Jul 16
I was referred to Derick when my credit score dropped 3 points as I was in the process of trying to get a mortgage loan. Derick gave me GREAT advise and also helped confirm all the credit myths I have overheard on how to improve your credit score. Not only did he give me advise, he not once tried to have me hire him like others usually do. Derick was genuine and that's hard to come across with business. :)
Ian Farruggio
Ian Farruggio
19:29 05 Jul 16
Derek was completely professional and offered helpful suggestions to help me improve my credit. He was honest, in that his services were really not needed and helped to point me in the right direction free of charge. If you have any questions regarding your credit, this is the only place to go!!!
Next Reviews

Don't Leave Without Getting Your Free eBook