Does consolidating debt hurt your credit score
Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt.Let’s say you have ,000 in unsecured debt—think credit cards, car loans and medical bills.Most of the time, after someone consolidates their debt, the debt grows back. They don’t have a game plan to pay cash and spend less.In other words, they haven’t established good money habits for staying out of debt and building wealth.So basically, your debt would go from ,000 to ,000–60,000.If that’s not bad enough, fraudulent debt settlement companies often tell customers to stop making payments on their debts and instead pay the company.The debt includes a two-year loan for ,000 at 12% and a four-year loan for ,000 at 10%.
The enticingly low interest rate is usually an introductory promotion and applies for a certain period of time only. Be on guard for “special” low-interest deals before or after the holidays.Pay attention here, because these crafty companies will stick it to you if you’re not careful.We’ve already covered consolidation: It’s a type of loan that rolls several unsecured debts into one single bill. Debt settlement means you hire a company to negotiate a lump-sum payment with your creditors for less than what you owe.The solution requires you to roll up your sleeves, make a plan for your money, and take action! Got a lousy credit score and a lot of debt and want to fix it with a debt consolidation loan?