Consolidating your pile of debts into one manageable monthly expense is one of the best ways to increase your credit score, improve your financial circumstances, and reduce your stress all at the same time. Debt consolidation allows you to pay off your individual debts, replacing them with a single loan with a single monthly payment.
Debt consolidation is an important step if you want to improve your credit score along with your chances at a better future. The amount of debt that you have versus the amount of available credit that you have factors into the determination of your credit score.
What is even more damaging than having a lot of debt is paying your bills late or not at all. Each time you make a late payment or fail to make a payment, your credit score experiences a negative impact that lowers your score. The lower your credit score is, the less likely it is that any lender is going to extend your credit in the form of a credit card, installment loan, or home loan.
When you consolidate your debts into one bill, you only have one payment to make. This scenario makes it more likely that you will remember to pay the bill on time. This type of debt consolidation typically lowers the monthly amount that you have to pay on your debts as well since it reduces the number of lenders that you have to deal with and consolidates the interest charges and late fees into one payment.
Intro: One of the best strategies you can follow to help yourself improve your credit score is to lose your debt. Even if you cannot repay all of your debt at this time, you can use debt consolidation to reduce it. Paying off your bills on time helps to restore a positive credit history.
