To better understand how moving forward with debt consolidation will likely affect your credit score, let’s do a quick recap.Your FICO credit score is determined by the following five factors: Borrowers struggling with high debt usually also have lower credit scores because of how much they owe.
With a debt consolidation loan, you use the money from the loan to pay off all of your existing debt.
Because it is a type of personal loan, a debt consolidation loan is paid off in installments over a set period of time.
With these credit cards, you can transfer all of your debts regardless of what type they are onto the new card, including loans.
The trick is to pay it all off within the 0% promotional period.
It’s important to do your due diligence before you make a decision.
The better informed you are about your options, the smarter your choices will be.
Whether you’re struggling to make ends meet or just want to use your money more wisely, debt consolidation may be for you.
Debt consolidation helps to eliminate multiple monthly payments to different creditors and replace it with a single payment.
So if you don’t expect to pay off all your debt during that low-rate period, it might not be worth the effort.
It’s just a matter of looking at the numbers to see what makes the most sense for your personal situation.
If you have accumulated a lot of debt and are making multiple payments each month on a number of credit cards or loans, you might consider consolidating.