Do Debt Consolidation Programs Hurt Your Credit in Any Way?

Saturday, December 5th, 2009 at 1:35 pm

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Many people have the impression that taking on a debt consolidation program will instantly damage your credit, and a little understanding of exactly how debt consolidation works can help to answer that question.

A debt consolidation professional will sit down with you and review your situation and work with you to determine which solutions may be best for your very specific financial situation. The point of debt assistance is to take high interest rate credit accounts and gather them all under one low interest rate loan payment. When you consolidate your debt you are also taking the many service charges you are paying every month and bringing them all under one reasonable service charge associated with a debt consolidation loan.

If you credit accounts were on the verge of going into default, or if you had developed a history of seriously delinquent payments, then these activities are doing damage every day to your credit score. The only way you can stop the damage these accounts are causing is to pay them in full and leave the creditor satisfied that debt is paid off and you no longer owe anything to them. Once that happens the account stops wherever it was at as far as payment history, and it ends with the very favorable process of being paid in full. As long as you make your payment on your debt consolidation loan every month, you have just taken huge steps to improving your credit rating.

A look at this model tells us that the question of whether or not a debt consolidation plan does damage to your credit is answered with an emphatic no. However, specialized advise coming from professionals in this field is highly suggested.

By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.

Hector Milla runs the Best Debt Consolidation Company website – where you can see his best rated debt consolidation company recommendation.

Visit for further information and read our full review of the best debt consolidation service, plus articles and video training about how to get the most of your debt consolidation process.