I want to pay off my debt, but am not sure if this will hurt my credit. Also, do I need a good credit score to consolidate my credit card debt?
Thank you for your question about credit scores and consolidating credit card debt. The short answer is that in most instances, credit card consolidation helps your credit.
While it is important to worry about your credit, your first concern should be paying off your credit card debt with affordable monthly payments. The single most important factor affecting your credit score is timely payments. Consolidate credit card debt into affordable payments. If you can’t afford your monthly minimum payments, then look for a hardship debt consolidation program.
It is important to remember that if you pay off your credit cards, you don’t have to cancel them. Closing the card will eventually lower your credit score because that information will be eventually be deleted from your credit report.
Bills.com makes it easy to shop for a debt consolidation personal loan. Start by filling in your credit score, zip code, loan purpose, and the amount of loan you need. Check out different offers and click on the appropriate ones.
It is essential to understand how a credit score works. There are a few different credit score models. The most popular ones are FICO and Vantage. Also, your credit score varies depending on the type of debt. There are different scores for mortgages, credit cards, and auto loans.
According to Experian, one of the three top Credit Reporting Agencies, the top factors in a FICO score are:
The type of debt consolidation that you can choose from is affected by your current financial situation and credit. Are you making your payments on time? Are you suffering from financial hardship?
When considering your credit score and credit card consolidation, it is critical to take into account your initial credit score and the type of debt consolidation program that is available.
If you have excellent credit, then you will most likely be eligible for a low-interest personal loan or a low-rate cash-out or home equity mortgage. Here are the two reasons that your credit score will improve:
While there are bad credit debt consolidation loans, those usually come at a very high price. You should be especially careful of short-term (payday) solutions. Those are quite often a debt trap.
If your credit score is low, or you are in financial hardship and not making your payments on time, then you need to look for a credit card consolidation program that allows you to make lower monthly payments. If you are looking for a debt settlement program or bankruptcy to consolidate your credit, then your credit score is going to be further damaged. Here are the main reasons:
Your credit is a vital consideration in choosing a credit card debt consolidation program. Remember, even if you have bad credit, once you start a debt consolidation program you can improve your credit score.
Bills.com created an innovative tool, the Debt Navigator that helps you match your personal situation with programs that help you manage your debt. Answer a few questions about your financial situation (debt, income, homeownership, goals, level of hardship), authorize a soft pull on your credit, with no impact on your credit score, provide personal contact information, and then click on the button. You will get a picture of your debt on one page as well as up to five different debt consolidation solutions. Pick the solution or solutions that seem best to you and get more information from Bills.com debt providers.