Are Debt Consolidation Loans Good For Improving Credit?
If you are looking at a negative credit score because of uncontrollable debt, there are a few things you can look in to for help. Debt consolidation loans are one way to get out of a tough financial spot. But how will they affect your credit? Lets take a quick look. A debt consolidation loan works by taking your existing debt with multiple creditors and lumps it in to one loan. The consolidation company will work out an arrangement with your debtors. This negotiated amount, or payment settlement, will be paid by the consolidation company. Once they have paid your debt off, you will then pay them back through monthly payments. A loan to pay your debt will do a few things to your credit report. All of the creditors that you choose to consolidate will show on your report as settled and paid. Many people will say that this is damaging, and it’s partially true. Having a debt settled is frowned upon and can affect your credit score. However, having unpaid, late, and otherwise delinquent acco