Credit Consolidation | There is very little knowledge about the benefits of credit consolidation. Many people become confused with the terminology associated with debt, consolidation and settlement. Point being, consolidation refers to the repayment of loans in a method that is acceptable and agreeable by the original creditors. There are no missed payments or settlements for a lesser amount than is owed. In almost every case, consolidation of current credit accounts has a positive reflection on credit scores and even helps the borrower to save money in interest.
Here are a few things you should know about credit consolidation:
1.Lower Payments and Interest
A consolidation loan permits the borrower to collapse all outstanding loan balances into a single payment each month. This allows credit accounts to be paid off in a single payment to a single lender. There is also the chance of a decreased interest rate.
2. Credit Score Impact
The impact credit consolidation has on a credit score will vary. If you are currently behind on multiple credit card accounts, combining them into a single consolidated loan could help increase the score once a few payments have been made on time. In other cases, the acquisition of a new loan account may cause the score to decrease due to the hard inquiry necessary to grant the loan approval.
3. Not a Quick Fix
Consolidation is a process that doesn’t immediately fix your credit standing. If you are considering the consolidation option to help increase your credit score, understand this won’t happen immediately. A professional financial advisor can help you to understand the current status of your report and how debt consolidation will affect it long-term. Keep in mind that credit isn’t established overnight and any improvement to it will take time as well.
Contact Credit Counseling Tampa Bay, Inc. to determine if consolidating credit is an option for you to consider.