What exactly happens to your credit if you do debt consolidation?
Jul 28, 2009 in
Credit
monkeyundermypillow
I have $7,000 in debt and I have heard about debt consolidation. Does this negatively affect your credit rating? Do you get to choose how much you pay monthly or is there a set amount they make you pay? I live in Canada, if that matters.
I have $7,000 in debt and I have heard about debt consolidation. Does this negatively affect your credit rating? Do you get to choose how much you pay monthly or is there a set amount they make you pay? I live in Canada, if that matters.
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6 comments
Texas Horse Lover on July 30, 2009 at 5:51 pm
When I did a debt consolidation, it went on my credit report and some creditors viewed it negatively and others thought nothing of it. The company negotiates a price for you to pay each month with your creditors and that is how much you pay each month. It usually is significantly lower than what you’re paying now, though. I think it’s worth it.
romiegalaxy on July 31, 2009 at 2:32 am
The companies will negotiate with your credit card’s to work out the monthly payments, usually you can tell the debt consolidation firm how much you can pay per month and they try to get it to that amount.
My husband did it and it is on his credit record. It has effected his score negatively so places that just go by the numbers it will effect.
It can potentially effect your score more to not pay the credit card debt off so if you aren’t going to be able to do so, it might be worth the smaller hit.
tracy v on July 31, 2009 at 4:49 am
a debt consolidation will help your credit it will go up after you pay them off, then you will only have that one loan on your credit. you can pay monthly payments with what ever company you use to do the consolidation. if you are a member to of credit union they are the best
Butterfly on July 31, 2009 at 10:59 am
I went online to look up your question, and here’s what I found….I hope that it helps you out….Best of luck to you!!
Sgt Big Red on August 1, 2009 at 6:29 am
Debt consolidation simply put means you are borrowing money to pay back a bunch of small loans. While it clears outstanding debts you are still in the same place, owing money.
What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.
If you want to stop the hounding and try and improve your financial standing, then the FTC recommends you do a debt counseling program.
I think this also works in Canada (hey)
Slimick on August 1, 2009 at 10:54 pm
Be careful! I do not recommend debt settlement/debt consolidators as I’ve heard too many horror stories. They can’t do anything that you can’t do yourself….If you are really behind on your payments, you may be able to settle your accounts for less than the full amount. If you aren’t behind and you use on of these firms….they will deliberately NOT pay on your account so they will default. This puts you in a position where settlement can be made. Bottom line: If you’re already defaulting/late on your cards….you can attempt to negotiate a settlement yourself….If you are NOT behind on your payments and you use one of these debt settlement firms…they will WRECK your credit by not paying in order to attempt to negotiate….You will pay dearly for this debt settlement with ruined credit. It’s not worth it.