Consolidating debt bad
In fact, doing so can have a positive effect on the debtor’s credit score if the consolidation helps the borrower eliminate missed or late payments.The borrower’s credit score will further improve as the total amount of debt goes down.Your unused credit and the age of your accounts will help your credit score.Debt consolidation loans allow borrowers to roll multiple debts into a single new one with fixed monthly payments and, ideally, a lower interest rate.
Credit utilization is likely to be high for any consumer researching debt consolidation, so the consumer must focus sharply on making all payments on time and avoiding new debt.
Free credit scores are not included with free credit reports, but they are available from a variety of sources.
Look on your credit card or loan statement, or sign up on websites that offer free credit scores.
Settled debt (when a creditor agrees to accept less than the amount owed) is not the same as consolidated debt.
Settled debt can be reported to the IRS, resulting in a tax liability on the amount forgiven.