Debt Consolidation Does Not Really Hurt Credit Scores

Many financial programs exist to help ease the monthly burden of debt for most folks no matter whether their credit scores are a bit tarnished or good as gold. Folks with very good credit histories can use these debt simplification programs to their benefit, as well as those whose credit leaves a bit to be desired. A lot of folks just do not understand the concept of a debt consolidation program. They believe they are just for cash-strapped parties who do a poor job of managing their monthly debt or keeping their promises. Nothing could be further from the reality. Debt consolidation can be helpful when it comes to managing debt for any number of folks. A laid-off cashier living on unemployment benefits, or a high-flying corporate CEO, can both benefit from consolidation.Juggling Finances Is a HeadacheAs mentioned, any individual with more than a couple of outstanding debts can benefit from consolidation. The state of the individual debts matters little. Whether the person is in arrears or in good standing, debt consolidation lenders realize they are marketing their consolidation loans to provide relief and will not give too much weight to those figures. Look at what happens that a consolidation can clear up. One slip-up and an otherwise good credit score can drop quite a few points. This usually occurs as a missed payment, or one that arrives later than it should for whatever reason. (Some credit card companies are notorious for mailing out bills only five business days, or less, before payment is due.) And having more than three or four accounts due every month at different times can be a bookkeeping nightmare. So, debt consolidation loans are beneficial because they simplify monthly debt payment.Debt Consolidation and Credit ScoresSome folks contend that debt consolidation can put a lot of hurt on credit ratings. For some, this may be the case, for others, it is far from the truth. A lot depends on the manner with which the debt consolidation process occurs and the experience and knowledge of the debt consolidation lender. If it is imperative that settlements must be made to bring an individual debt to a manageable load, there may be some residual credit score harm.Settlement DingsA settlement is a procedure in which the debtor approaches the creditor with a hardship plea and attempts to get the actual principle lowered. Many creditors often agree to lowering the amount of the actual debt for a quick one-time payment, as can occur when debt consolidation relief is sought. Since the debtor will not be paying in full, the credit report may take some dings. This is helpful to bring debt down to manageable levels, but there is that price to pay. The effects of these dings do not last all that long, though.The Bottom LineNaysayers aside, there is not too much to worry about regarding these credit score nuances. The fact is, the credit reports of just about every borrower changes or fluctuates from month to month. Behind that, the fact is, once all these smaller debts are cleared, the repayment of the debt consolidation loan, provided it is done properly such as making payments on time, can actually remove those credit dings and eventually even improve a credit rating. A debt consolidation borrower may actually see his or her credit score actually improve up to a hundred points within a month or two of procuring a debt consolidation program that is appropriate for them. Debt consolidation can be a relief for many without doing serious damage to credit histories.