You may be considering taking some or all of your old debt and roll it into a new consolidation loan. You want to refinance debt to a lower interest rate and to lower the total monthly minimum payment. While both of these results can help your overall financial picture, getting rid of older debt can hurt your credit score. A portion of your credit score is determined by the length of your credit history. Open accounts that have a long track record of on-time payments will boost your credit score. Closing them and rolling them into a new loan can drop your credit score significantly, especially if it reduces your overall available credit. If reducing the interest rate you pay on loans and credit cards is the goal, try to negotiate a lower rate with your existing lenders before choosing consolidation.
Credit Consolidation May Not Be The Answer
by Sonya Smith-Valentine
Article by Sonya Smith-Valentine
Sonya has written 178 awesome articles for us.
Sonya Smith-Valentine is an accomplished attorney and CPA, dynamic trainer and energetic speaker whose engaging style makes a lasting impact on her audiences and clients. With over twenty years of experience, Sonya colors her timely and relevant messages with drama and humor. Using her legal background, Sonya goes beyond inspiration to convey concrete ideas and practical tools that allow audiences and clients to make real financial changes in their lives. Audiences and clients walk away with renewed determination to embrace their inner strength and manage their financial reputations all the way to success.