” but also in giving you tools to decide what the best course of action is in your particular situation.
Remember, when considering whether to do debt consolidation, compare how these factors would be affected by the loan: If you have any questions about the information above and how it might relate to your own individual situation, please post a comment below and we’ll do our best to answer it.
In this scenario, your credit score will likely improve!
However, if you think you might be tempted to continue racking up credit card purchases after doing debt consolidation, then you have to make a harder decision.
If you can find a debt consolidation loan that will help you pay off your debt through lower interest rates or lower monthly payments then you should probably do it – and close your old credit cards despite the potential negative impact on your credit score.
If you make use of a balance transfer offer and move all your balances to a new credit card, you will immediately increase your total credit limit.
Using the example above, let’s say you transferred your three credit card balances onto a new card.
This is why it’s important to know yourself and be realistic about your future behavior.
If you know for sure that you won’t be tempted by leaving those old accounts open, then you can feel comfortable doing debt consolidation and knowing it will not hurt your credit, aside from the relatively minor impact of the hard inquiry.
And for further reading, check out our article, “Is Debt Consolidation a Good Idea?
If you've maxed out your credit cards and are getting deeper in debt, chances are you're feeling overwhelmed. Now imagine hearing about a company that promises to reduce – or even erase – your debt for pennies on the dollar. The Federal Trade Commission (FTC), the nation's consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.
A bigger concern than the hard credit inquiry is how the debt consolidation might affect your credit utilization.