If your credit is bad should you consolidate your bills?
My best friend has alot of debt. She just used one of those consolidation places, using a number off the tv, to have one monthly payment and they reduced her total debt. Is this a good decision?
I have some debt and I want to do this but I am afraid my credit will be worse. My credit is already bad for past due accounts in collection status. No I wasn't a deadbeat..I has surgery and couldn't pay my bills and them the minimum balances kept snowballing. Some of my friends say it makes your credit worse but I think paying it off would be better than not paying it. Anyone have a real answer on this? Thanks.
- jeanimusLv 71 decade agoFavorite Answer
If she got an IVA then it should improve her credit rating because it will show each debt as settled, and the IVA as up to date.
If she got a consolidation loan it will show the same thing, with the loan up to date. However she probably still wont get credit because she has had defaults on the original debts, which will show for 6 years.
If you just dont pay your debts, your credit rating will show lots of current defaults.
But you should get independent advice as to your particular situation as you may not be eligible for the same kind of deal she got. Plus the ones off tv cost a lot of money, even if they say the advice is free. The advice may be free, but setting it up wont be. You'll probably have to pay either up front fees, or a monthly fee, or both.
- Jen GLv 51 decade ago
Usually debt consolidation is only treating a symptom and not really a solution to paying off your debt. The best thing you can do is to set a budget, in writing on purpose, and then look for any place you can cut your expenses.
Then any extra money you have, put towards your debts. Focus on the smallest one first, while making minimum payments on the others. Then when that one is paid off you take the payment you were making to that and add it to the next smallest, and keep working up through your debts. Then you're free and clear of the debt.
- Anonymous1 decade ago
I got a second mortgage out for that very purpose and it hurt my credit score. In some ways it does not make sense. the credit cards costs $500 a month, and consolidation over 20 years cost $300. that's a net savings to me and now I can pay the bill off in half the time. But it showed up as a negative on my credit score. the real deal is to cut the cord and get out of debt by any means necessary. It is a debt trap!
- 1 decade ago
I went through one of those places and it made my credit better, because at least something was being paid on the bills instead of nothing. I can't remember who I went through, it has been about 10 years. But think about it, if you can have some of the interest dropped because most places will have the interest cut in half, the bill is getting paid how can it make your credit even worse? Just remember not to make more debt until the bills are paid.
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- alysonLv 43 years ago
would desire to you elect to bypass the consolidate way, elect the two to apply your place or debt stack. utilising your place gets all debt under one roof, excuse the pun, make ALL interest deductible, decrease your cash and allow you to place money aside on your retirement or different economic targets. Debt stacking will take longer yet all costs will proceed to be paid on time. seem in any respect your costs, alongside with loan. record them optimum interest value first all the way down to the backside.To the left, positioned the corporate call, to the the main suitable option positioned minimum fee and to the a approaches authentic positioned what you frequently pay each month. you will start up with the optimum interesat value first. For all you different money, make in simple terms the minimum and take any extra fee and place that onto the minimum for the optimum. save this up until this is paid, then roll ALL that fee down on the 2d. save this up until all is long previous. Takes discipline, is longer yet you nevertheless save making all your cash. some right here would say this is not stable. Why? Your credit is being affected certainly. Oh, i assume they do unlike minimum fee to all different costs. How long will you be in debt with the aid of persevering with what has occurred? This technique will shorten length of time in debt and how lots you pay back a approaches better than the unique plan. Use homestead if achieveable. evaluate a comapny that provides no escrow- in fact, gadgets you upas escrow holder, no PMI/MIP, no balloon money, fastened value in simple terms, fairness builder- pay off formerly, no money at remaining.
- Anonymous1 decade ago
I believe that to be just another gimmick. You could do that yourself with a budget instead of increasing your debt by paying somebody else to do it for you..
- 1 decade ago
Go to Yourcreditattorney.com
- BabyLv 61 decade ago
yes and no, look in to all that you can befor you do that.