Does consolidating credit card debt hurt your credit dating political differences
Consolidating debt involves combining multiple debts into one debt.This can be done using balance transfers, personal loans, second mortgages, home equity loans or through a special program offered for student loan debt consolidation.However, this small hit to your credit is not necessarily a reason not to do debt consolidation.A bigger concern than the hard credit inquiry is how the debt consolidation might affect your credit utilization.You also still have your old cards (with a total credit limit of ,000), so your total credit limit is now ,000 and your credit utilization is 15%.In this scenario, your credit score will likely improve!The same kind of calculation is true if you get a home equity loan or a standard debt consolidation loan: your credit score will likely improve if you keep your old credit cards open, but it will get hurt if you close them.
The hard inquiry will lower your credit score by a few points and stays on your credit report for two years.Interest rates do not appear on a credit report; therefore, the interest rates on your credit cards do not affect your credit worthiness or credit scores.While consolidating those debts into a single payment with a lower interest rate can help you pay off debt faster, you should be wary of companies offering debt consolidation plans.Consolidating debt can help you pay off debt faster, lower the amount you must pay back or lower your monthly payments by stretching out the amount of time it takes to pay your debt.
However, consolidating debt can hurt your credit score.
Some plans require you to become delinquent on your accounts in order to enter into the program.