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Tip of the Day Put At Least 20% Down On A Home

Put At Least 20% Down On A Home - Your home is most likely the biggest purchase you will make in your lifetime, so when planning for the big day,...

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Credit Rating Debt Consolidation

The intricacies of debt consolidation have been known to confuse people.  Ads tell you that a consolidation loan will help your credit rating.  ‘You should instantly get a credit rating debt consolidation loan to alleviate your debt and improve your ratings,’ is just one way an ad can intrigue you.  However, there is nothing instant about credit rating debt consolidation loans

Time can repair your credit rating.  A debt consolidation loan can over time repair your credit rating.  If you think in one month that your credit rating debt consolidation loan will correct your scores you are not wrong, but you are not right either.  Let’s look at how credit reporting works. 

A company reports either monthly or quarterly to the credit agency.  In this time they will report that you were in good standing, poor standing, or that you had missed payments.  Your score will fluctuate by a few points.  If you pay off a debt your score is helped, but in the same time if you take out a new loan your points will drop.  With the credit rating debt consolidation loan you may find the paid off debt weighs less than the new loan in terms of score thus your score might go down initially. 

Over a period of one year your credit rating debt consolidation will improve.  In two years it can improve more if you do not create more debt and pay on the loan appropriately.  There is a fine line in how a consolidation loan can help your credit rating.  If you do not pay the monthly amount it will of course decline.  It often seems that if you do not pay each month your score deteriorates quickly, but when you pay correctly it takes eons to improve.  The truth is that little things will change your scores.  If you continue to work towards good credit your scores will over the long term increase.  The consolidation loan is meant as an avenue to help your credit issues, but not to make an immediate change in the debt or your scores. 

 

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