If in a debt consolidation program, is your credit score affected?
Dec 10, 2009 in
Personal Finance
Brian W
And if it is, after the program, can you rebuild it? After a few years would trying to get a loan for a new home still be affected by having gone through the consolidation program? Thank you for any responses.
And if it is, after the program, can you rebuild it? After a few years would trying to get a loan for a new home still be affected by having gone through the consolidation program? Thank you for any responses.
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2 comments
the_buccaru on December 14, 2009 at 2:44 am
If you responsibly pay down your debt and do not declare bankruptcy, you will rebuild your credit and be fine.. My daughter did it and now has a high 700s score and owns her own home.
OES, Inc on December 16, 2009 at 10:51 pm
It completely depends on your agreements with the agency assisting you and your lenders. If the agency appears on your credit report, it can often have a negative impact on your file; although, it may not directly impact your score (lenders look at more than scoring).
Most debts can be negotiated directly with the lenders – this is the method we suggest to most of our struggling clients. The key is to increase available lines of credit and lower the interest rate. This combination has an immediate and long term positive impact on your credit file as a whole.
Ultimately, you’ll want all of your balances to be less that about 40% of the total available. If you cannot achieve that by lowering the balance, you may be able to achieve it by increasing the limit. This often allows you to apply for additional credit (most people view this as a negative thing; however, if you are able to move larger balances over three different accounts, without ‘maxing’ them out – you will repair your credit immediately and still owe the same. In addition, most ‘new accounts’ offer 0% interest on all balance transfers).