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Commonly Asked Questions about Debt Consolidation

Debt consolidation doesnt automatically close your credit card accounts. But if keeping an account open tempts you to rack up more charges, then it might be a good idea to close the account. However, you might damage your credit scores by closing the account.
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Debt consolidation is often the best way to organize your current debt and simplify repayment. Consolidation, if used correctly, offers benefits that could save you money.
Your debt consolidation loan could come with more interest than you currently pay on your debts. This can happen for several reasons, including your current credit score. If its on the lower end, lenders see you as a higher risk for default.
Check your credit score Youll typically need a credit score of at least 700 to qualify for a debt consolidation loan with a competitive interest rate. Although a lower credit score doesnt automatically equal a denial, as some lenders offer loans for bad credit.
Bottom line. Consolidating your debt into a new, lower-interest loan a balance transfer credit card, personal loan or home equity loan may hurt your credit scores in the short- or medium term. Does Debt Consolidation Hurt Your Credit Scores? creditkarma.com advice how-debt-conso creditkarma.com advice how-debt-conso
It makes getting out of debt easier and sometimes cheaper. That said, debt consolidation isnt a magic bullet. It can temporarily ding your credit scores or bring even more damage if youre not disciplined with your debt repayment.
Debt consolidation can negatively impact your credit score. Any debt consolidation method you use will have the creditor or lender pulling your credit score, leading to a hard inquiry on your credit report. This inquiry will decrease your credit score by a few points. However, this credit score decline is temporary.
Ways debt consolidation can hurt your credit score For example, if you move your existing credit card balances to a balance transfer card, then end up using your old cards again, you may have more debt than when you started, which will likely hurt your credit score. Does Debt Consolidation Hurt Your Credit? - NerdWallet nerdwallet.com loans personal-loans d nerdwallet.com loans personal-loans d
Debt consolidation itself doesnt show up on your credit reports, but any new loans or credit card accounts you open to consolidate your debt will. Most accounts will show up for 10 years after you close them, and any missed payments will show up for seven years from the date you missed the payment.