How does using debt consolidation affect my credit score? Should I do debt consolidation?
How does using a debt consolidation service affect my credit score? Do the credit cards have to be canceled? I have a couple that are over three years old and I would not like to lose that credit reference. I am current on all my cards and have been for over 16 months - Should I do debt consolidation?
Usually, you are not required to cancel credit cards you pay off with a consolidation loan. As you mention in your question, the primary benefit to keeping the credit cards open is to maintain your positive payment history. If you do decide to keep the accounts open, make sure that you do not charge up a new balance. A common pitfall for consumers who consolidate debts is that they then charge their credit card accounts back up, leaving them with twice the debt that they started out with. And in many cases, half of that debt is now secured by their home.
Very quickly, if you want a free debt consultation with one of Bill's approved debt help partners, click here: Debt Consoldation Quote
If you are considering a debt consolidation loan, I definitely encourage you to get rid many of the accounts you paid off with the consolidation loan so that you are not tempted to use the cards again and put yourself in a worse financial bind. You can keep one or two of the accounts open for emergencies, and to maintain accounts with a long payment history on your credit report, but you should try to pay off any charges made on the accounts at the end of each month, if at all possible. If you are interested in a debt consolidation loan, you should check out the Debt Consolidation section of the Bills.com website at: Debt Consolidation
You can also submit your information on the Bills.com Savings Center, found near the top of all Bills.com pages, and we can match you with potential loan providers to discuss debt consolidation loans options that fit your needs.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Debt statistics
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Housing debt totaled $12.612 trillion and non-housing debt was $4.891 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Mississippi, 17% have student loan debt. Of those holding student loan debt, 11% are in default. Auto/retail loan delinquency rate is 8%.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
