Will a debt consolidation loan hurt my credit if I get it from my credit union?
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I work in this industry, and let me say the answer is it probably won't hurt your credit. Some of the other posters are confusing a debt consolidation loan, which is just a regular installment loan, and when people are going to a debt repair service.thats for people with bad credit, and they are going to negotiate with your creditors for lower rates and a reduction of penalties...but you should know that will be noted in your credit report, and you will have a very low score indeed...(people in need of this service, usually already have trashed credit).
This consolidates your payment to one group...the debt repair service...however, they will take a payment from you and distribute to your creditors...you still owe them all, its not a true consolidation of debt to one source...just a consolidation of the payment to the debt service.
What you are doing, is far different from that, taking a loan from a credit union and paying off other debts, may help your credit. The debt consolidation loan itself, will hurt your score...as will even the application process (an inquiry)...however, these are very minor negatives, compared to the positives.
You didn't say what debt you were paying off, but, if you have maxed out credit cards.those maxed out cards really hurt your score. So when you get the consolidation loan, suddenly those negatives are gone, and you end up, overall, with a much higher score.
In general, yes, it helps. In specific, you didn't give enough info to tell. For example, if you have 3 $10,000 credit lines, and each has only $1,000 on them. And you consolidate to one $3,000 loan at your credit union.that wouldn't do you a bit of good, because your 10% utilization was already fine, and all you did is open up more credit, which is an inquiry and a new tl, and that probably lowered your score a few points. However, if you have 3 $1,000 credit lines, and they are all maxed out at $1,000 each...and you consolidate onto a credit union loan, for $3000.your score will probably increase a lot, as you just removed 3 maxed out credit cards from your report.
Yes and no. It will put a mark on your credit saying that you did a debt consolidation .. BUT you are getting rid of your other debt. So, in other words, would you be any worse off then you are now?
No, it will not hurt your credit and there shouldn't be anything on your credit report to indicate it's a consolidation.
If you're consolidating credit cards, make sure you cut them up after their paid off. If you don't then you'll be sure to use them again and before you know it you'll be right back in the same situation.
Credit unions usually have excellent rates and most loan officers don't distinguish them any differently than a bank or other financial institution.
No.
But if you don't change your habits and behavior, you'll be back where you are in just no time.
No it will not hurt your credit if you can handle the money properly. For that you can go to a financial planner or a debt consolidator and they will help you out.
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Combination of various high interest loans into a single one, it is called debt consolidation. The aim behind debt consolidation is to reduce the payments or the interest rate. You make a single payment toward the loan instead many payments each month.
http://debt-trap.com/category/debt-conso...
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