Information on consolidating debts
But, before applying, be sure to ask about the lender’s credit requirements.
And if you make your credit card or loan payments as agreed, you’ll establish a positive payment history, which affects your credit scores more than anything else.
(Payment history accounts for 35% of traditional credit scoring models.)Transferring credit card balances, paying off credit cards with a personal loan or enrolling in a debt management plan is only the beginning of credit card debt consolidation.
The best way to consolidate credit card debt — and whether consolidation will work for you at all — depends on your situation, so you might want to consult a non-profit credit counselor about your best options.
The following five tips can help you figure out which credit card consolidation strategy suits you best.
Credit card debt consolidation may save you money, but it’s often not free.
Credit cards may have a balance transfer fee, so you’ll want to make sure that cost doesn’t outweigh the potential benefit of getting a lower interest rate on your debt.
Here’s how credit card consolidation works: You first decide if you want to take out a new loan, open a new credit card or enroll in a debt management plan (more on that later).
Whichever option you choose, you will use it to pay off your multiple balances.
Keep in mind a debt management plan may have a negative impact on your credit during the course of the program because your creditors will close or suspend your accounts while in the program, and this can affect your credit utilization.
So make sure you are ready to live credit card free for a while.