People have their own thought about whether or not it is right to use credit cards. For some people, owning them could be difficult and stressful. However, for those who are diligent and committed to stick to schedule and plan, it is safe to assume that you are the right kind of people to use the cards. If you have more than one and are struggling with debt, consolidating credit card debt is the choice. However, you will need to know the answer to does debt consolidation hurt your credit. It is crucial for dealing with credit card issue like this.
Debt Consolidation Loan and Credit Score
Does debt consolidation hurt your credit? Before we talk about that, you should know what this consolidation is here. By definition though, it is one of debt relief options by way of combining all of the existing loans into one. That way, people usually benefit from its interest rate and lower payment. While there are many things to benefit from it, the answer to does debt consolidation hurt your credit is still yes. Let us show you what makes the consolidation to possibly hurt credit scores.
- Continuous Charges on the Cards
When you are working on removing the debt, usually counselors would suggest you to stop making new purchases with the cards until they are paid off. It would be especially so if you have paid off your balances. The consolidation does hurt the credit by reducing any gain of credit utilization when the balances go up because of you making charges on the cards. Does debt consolidation hurt your credit? You see the answer to that clearly from this, right? It affects credit score if you don’t follow the rules. So, don’t try to break them then.
- Late Payments Made on the Loan
Late payments can be the cause too. However, it is not like one or two days could endanger your credit score. The answer to does debt consolidation hurt your credit will be yes if you actually make payments on the loan 30 days late or more. Let us tell you that it will be recorded in the payment history. You know that your credit score depends on your payment behavior. If you keep being late, your score will go bad. Does debt consolidation hurt your credit? Now, you can see this for yourself.
- Application for Disqualified Loan
Each loan has its own requirements to meet. We don’t always qualify for every loan. Despite that, sometimes people apply for the loans anyway where they don’t actually qualify for those loans. Credit inquiries even for something like this must have been recorded, no matter how short the period is. Unfortunately, such inquiry can lower the score. So, even here, the answer to does debt consolidation hurt your credit is yes. To begin with, you can’t apply what you don’t qualify. Credit card debt consolidation must consider it.