How debt consolidation can affect your credit

If you’ve been struggling with paying down debt, you may have thought about debt consolidation as a way to snowballing balances on credit cards, personal loans, or medical debt. 

You might be concerned about how debt consolidation affects your credit. Are there other ways to consolidate your debt that don’t affect your credit? 

Read on, and we’ll explain the considerations when you’re thinking about debt consolidation for debt help.

Is Debt Consolidation Your Best Option?

Who is debt consolidation an option for? Much of the decision comes down to what your current credit score is, along with your current interest rates on your credit cards. 

Consolidating credit cards might not be worth it if your credit scores are good, and not all debt qualifies for consolidation. Car loans and home loans are off the table, for instance. So how else might you know if debt consolidation is worthwhile?

Good Credit Score But High Balances 

If your credit score is good, but your credit cards are fully utilized, consolidating them into one payment with a loan might benefit you. The better your credit, the better your rate will be, sometimes far lower than what your cards are at.

Sometimes converting credit card debt to a simple interest loan can make it easier to pay down the debt in a reasonable amount of time. Remember, credit card companies charge interest each month on the total balance, so if you carry the balance over each month, you’ll pay interest on last month’s interest and on and on. Simple interest loans don’t—the interest is set for the term, and that’s all you’ll pay.

Good credit is crucial here because a debt consolidation loan must have a low enough interest rate for the deal to make financial sense. That said, there are other forms of debt consolidation that don’t require a good credit score.

Suppose you have maxed out credit cards and less than perfect credit. In that case, one option is debt relief from Alleviate Financial Solutions, which can combine your unsecured debt into a single payment and negotiate balance reductions on your behalf.

Your Payments Aren’t Reducing Your Balances Each Month

When you can only afford to pay the bare minimum payment on your credit cards every month, it’s practically impossible to pay them off. That’s because new interest is added every month you carry a balance over. In these cases, debt consolidation could provide debt relief. Your total monthly payments can be reduced while reducing your balance more every month you pay.

Recent Pay Cuts Or Job Loss

Recent pay cuts or a job loss can throw your finances into a tailspin. When this happens, you might have a period of time while your credit scores are still high, but you can’t pay off your cards.

A consolidation loan might help if the situation is only temporary. Keep in mind—good credit is needed to qualify for an interest rate that makes sense. If a debt consolidation loan isn’t available to you, Alleviate Financial Solutions has alternative programs for credit debt relief. Call today to get financial relief!

How Do Other Debt Relief Options Affect Credit?

When a consolidation loan isn’t feasible, other methods are possible for you to still get debt relief. Different programs have different effects on credit though, so let’s cover how the various forms of help with debt can impact credit.

Calling Your Credit Card Companies Has The Least Impact

If your struggle with debt is only temporary, your credit card companies may provide better terms if you explain your situation. The bottom line is, credit card companies make more when you’re a customer who uses their card, so there’s a strong incentive for them to find a way to work things out.

Some people hate negotiating with creditors. If this is you, Alleviate Financial Solutions can help. We contact creditors on our clients’ behalf to save significant amounts of interest charges and fees.

Filing For Bankruptcy Hurts Your Credit For 10 Years

Filing for chapter 7 bankruptcy results in a massive blow to your credit score for up to ten years. Because of this, bankruptcy is a last resort. If you have zero chance of paying off your debt anytime soon, though, bankruptcy may be your only option. Unless this is the case for you, you probably have much better options available to you. 

Debt relief companies are an alternative to bankruptcy. If you’re unsure what to do about your debt, reach out to Alleviate Financial Solutions today, and we will help determine what relief you qualify for.

Debt Consolidation Provides Relief With Less Credit Impact

When you’re stuck in the difficult financial spot of having just-okay credit and growing credit card debt, debt consolidation programs are likely a better method of getting financial debt help than bankruptcy. 

Debt consolidation programs can also reduce your debts significantly, but they won’t wipe them totally clean like bankruptcy. You’ll still need to pay a lump-sum payment or set up a payment plan that will get the debt paid off in usually just a few years.

This option gets you back on track with your credit much faster than bankruptcy that can wreck your scores for ten years. You’ll alleviate your debt faster and with less impact on your credit. 

If this option is right for you, the professional debt negotiators at Alleviate Financial Solutions will contact your creditors on your behalf to get reductions in your unsecured debt balances—far simpler than dealing with bankruptcy court!

Consolidate Your Debt With Alleviate Financial Solutions

Alleviate Financial Solutions helps people just like you by doing the heavy lifting in your credit debt company negotiations. We find the best way to consolidate your unsecured debt so you can stop the credit card company fees and penalties. Whether a debt consolidation loan, debt consolidation program, or debt settlement, we are here to make financial freedom possible for you!

Contact the debt relief experts at Alleviate Financial Solutions today!