If you choose to take a debt consolidation loan to help get out of debt you may be wondering if it will affect your credit score. It should not affect it much in the short term. Credit agencies usually look at all of your credit history as a whole and will take note that other accounts were paid off. This is due to the debt consolidation loan. In the big picture, as long as you make your payments on time for a year or two your credit score will ultimately improve.
The thing to remember though is to handle the accounts your pay off properly. You may decide to close the credit card accounts so you are not tempted to use the increased credit made available by the debt consolidation loan. Do not be too quick to do this because closing your account does not close the credit history on them. Also by closing your accounts your lower your available credit which raises the percentage of available credit that you are using at the present moment. This can go against you because a credit agency may very well feel that you are at you limit of available credit and consider this a dangerous warning sign of a bad risk.
If you do decide to close accounts anyway because you just do not trust yourself close the newer accounts over the ones you have had for years and years. If you have long-standing accounts on the report, it establishes a long credit history and that helps your credit score. Make sure your write a letter to the creditor if you decide to close and account that it is being closed by your request and it should be put on your credit report that way. Make sure to check your credit report and see that it is written correctly afterwards.
Final Tip: By researching and comparing the best credit card debt settlement services in the market, you will be able to determine the one that meets your specific financial situation. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned credit card debt advisor and money by getting better results in a shorter span of time.
Hector Milla runs the Credit Card Debt Free website – where you can see his best rated credit card debt settlement and debt consolidation service.
Visit for further information and read our full reviews of the best debt settlement companies in the market today, plus articles and video training about how to get the most of your credit card debt settlement process.
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