BILL'S ANSWER
Thank you for visiting Bills.com. Here is an answer to your Credit question - which is really a question about relative interest rates (and cash flow) and also credit rating.
First, relating to the cost of the debt you are best going with the strategy that has the lowest cost of the debt which is represented by the interest rate. Typically (but not always, since you could have zero percent teaser rates, or low introductory rates) it is best to consolidate debt with a mortgage refinance, since mortgage rates are at historic lows and since mortgage interest is tax deductible. You can apply for a mortgage refinance consolidation loan here:
Ideally, however, you should pay as much as you can to pay down debt and get debt free as quickly as you can. It is almost always your highest return on your money (and you'll sleep better at night) to get debt free.
Now, onto credit impact. If you refi, and pay off your credit cards, it typically helps your credit rating as your unsecured debt balance goes to zero and your credit utilization on those accounts goes to zero (just don't run them back up!) If, however, you balance transfer or take out a new loan that is maxed out or has a high utilization (over 50% of your limits)... you will want to pay them down asap to improve your credit.
It is important to understand how your credit score is calculated. Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. All items remain on your credit report for up to 7 years. A bankruptcy may remain on your credit report for up to 10 years.
We hope that this helped you to Find, Learn, & Save!
If you want a free debt consolidation quote, you can go here:
We hope that this helped you to Find, Learn, & Save!
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January 05, 2009
January 05, 2009
January 05, 2009
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