11:11 asked:
When you consolidate debt, it shows all old debts as being paid, etc, but the one new debt ratio, which is the amount being owed to the consolidation company will be huge. QUESTION: Does It lower the credit score to have a huge debt ratio like this?
OTHER QUESTION: and you also want to have say, 3 credit cards, (3 of them is the number you want to have a good credit profile, right), then the debt consolidation companies close your credit cards or do they not? How does it work
When you consolidate debt, it shows all old debts as being paid, etc, but the one new debt ratio, which is the amount being owed to the consolidation company will be huge. QUESTION: Does It lower the credit score to have a huge debt ratio like this?
OTHER QUESTION: and you also want to have say, 3 credit cards, (3 of them is the number you want to have a good credit profile, right), then the debt consolidation companies close your credit cards or do they not? How does it work
ANSWER: Pay your bills!
OTHER ANSWER: Pay your bills!
first of all debt consolidation only consolidates what you tell them too. They can’t get access to all your debts so the answer is no. if you have 15 accounts and you only need to consolidate 10 of them because the other 5 are on time or close to being paid off, or you just aren’t going to pay them off, they wont know unless you tell them and give them the account numbers.
No you do not close your credit card accounts. you can just not take on any new debts like car, mortgage, loans and other larger debts. My mother in law did it and she was still able to use her credit cards… but she may not have had them consolidated. But if you are trying to pay off those cards then it would be dumb to continue using them.
No it does not up your score.
Providing you consolidate and lower your repayments, you could try continuing to pay the new lower payment debt, by paying as much as you were paying before consolidation.
That will increase your principal payment
and continue to lower your interest : princiapl ratio
The temptation is to have lower payments, but that does mean you’ll take longer to pay off the debts, and so you’ll end up paying a huge amount more in interest rates over time. Possibly thousands more.
Be careful–think this through very carefully and do the math.