Credit card consolidation is the surefire way to boost your score – Is this true?

These days, with the record breaking statistics of the people going bankrupt, an increasingly large number of people are desperately looking for ways to eliminate their debt burden. If you’re over your head in credit card debt and you don’t know what to do in order to repay your debt obligations, you should hire a financial planner so that you may get out of debt with ease. The financial planner will ask you to take help of a credit card debt settlement or a credit card consolidation firm so that you can combine your debts and repay them without burning a hole in your wallet. But the question that is asked by most debtors is whether or not this will hurt their credit score in the long run. The answer is in the negative as the debtor ends up repaying the entire amount but in small and affordable monthly payments. Read on to know the effects of credit card consolidation on your credit score.

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What happens when you take the decision of repaying through consolidation?

Just as you take the decision of enrolling yourself in a debt consolidation program or take out a consolidation loan, secured or unsecured, this is reported to the credit bureaus and they come to know that you’re not paying as agreed with your credit card company. This slightly hurts your credit score but the extent is something that can be easily avoided. There will be a temporary drip in your credit score for a certain period of time but as soon as you start making the payments on time, your credit score will be increased.

How to make payments through a credit card consolidation option

Whenever you enroll yourself within a credit card debt consolidation plan, you have to repay your entire debt in single affordable monthly payments. If you take out a loan, you’ll get lower interest rates than what you were paying and if you sign up with a program, your debt consultant will negotiate with your creditors in order to lower the interest rates. Then as the rates are lowered and terms are made favorable, you have to start making monthly payments to repay the entire debt amount. Just make sure that the payments are reported to your creditors so that it may boost your credit score.

Before you take resort to any of the credit card consolidation options, you should determine which one suits your needs in the best possible manner. Manage your finances to make the entire process successful as failure to make the monthly payments on time may discontinue the entire agreement and also trash your credit score.

This article has been posted by guest blogger Allen Smith. Follow him on Twitter today.