If you are thinking about debt consolidation, you might want to first consult a non-profit credit counselor.Many people get into debt because they can’t afford to make monthly debt payments on top of paying for daily living expenses.The cliche about rearranging the deck chairs on the Titanic came to mind when I read your question.Debt consolidation won't address the real problems that may sink your credit rating!Some creditors might be willing to accept lower minimum monthly payments or change your monthly due date because they would rather get paid less on a regular basis – than not get paid at all.Here’s what you need to know if you are considering these options for consolidation: Transferring different debt balances to one credit card account Many credit card companies offer zero-percent or low-interest balance transfers to allow you to consolidate your debt on one account.
You can also reach out to your individual creditors to see if they will agree to lower your payments.
The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.
The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the chance to begin adding to your credit card balances again.
Consolidation means that your various debts, whether they are credit card bills or loan payments, are rolled into one monthly payment.
If you have multiple credit card accounts or loans, consolidation may be a way to simplify or lower payments.