What Does Bill Consolidation Do To Credit?
Bill Consolidation Impact On Your Credit History
Many consumers who are facing debt problems are already quite concerned about their credit history and score. There is reason credit ratings affect nearly every aspect of a consumer’s financial life. A mortgage loan, a car loan or lease, credit card interest, insurance quotes, even employment opportunities can be jeopardized for a poor credit score. The good news is that a bill consolidation will not negatively affect your credit score or credit history in any way. In fact the credit effect of a bill consolidation is most often positive.
Why A Bill Consolidation Actually Helps Your Credit Score
The reasons a bill consolidation can positively, as opposed to negatively, affect your credit history are many. First and foremost, when you consolidate your bills you are avoiding going into default. Defaulting on your credit obligations is probably the most dangerous move you can make in regards to your credit history. It shows potential lenders that you cannot meet your financial obligations and are a poor credit risk. Another reason which will benefit your credit history when you consolidate your bills is the payoff of your accounts. When you attempt to settle or negotiate your debt, these “settlements” between you and your creditor are reflected on your credit report. The account will not show as “closed- paid in full” but rather as “settled”. A settled account will negatively affect your credit rating as it shows that you did not make full payment on your credit obligation. While better than a default, a settled account is still bad news for your credit report. When you utilize a bill consolidation, your accounts are closed and paid off. This is excellent news for your credit report.
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