Does consolidating debt hurt your credit
However, you do need to know that applying for a debt consolidation loan will trigger a hard inquiry to your credit report.This could bring your credit score down a few more points in the short term.Pros: The interest rate could be lower than your credit cards’ rates, and you may have several years to pay off the debt.Cons: Some lenders charge an origination fee, which could make this a costly option if you’re consolidating a lot of debt.My credit score is low due to high credit card debt-to-income ratio.I have a mortgage in good standing, but am looking to refinance in six months to a year.You seem to have a good handle on your credit score, but if you haven’t looked at your credit reports lately you should probably do that and check for any errors before you get started.
As you work to build your credit up, remember that on-time payments are crucial. Ask a question, or click on any expert to see their previous answers.Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998.He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues. Dear Credit Guy, Will a debt consolidation loan hurt my credit? My credit score is 650, all payments made on time and in good standing.If you can qualify for a consolidation loan that will both pay off your total credit card debt and reduce the overall interest you will pay, this could be a great solution.
If you're considering this pathway, however, here are a couple of things to keep in mind: See "6 debt consolidation traps and how to avoid them" for further information and advice.
You will, however, have to consider a few things: With that in mind, whatever route you choose, you need to be fairly certain that you will qualify for the debt consolidation loan or balance transfer.