Debt consolidation affect on the credit score

I looked at it like this, if consolidation caused a minor dip in my credit scores, it was far better than the train wreck that was about to occur if I didn't consolidate!

If it does have a negative effect, it will be minor and in the long term you will be far better off.

A statement saying that you are using the consolidation program will appear in your credit report. This statement has no negative impact if compared with any other debt elimination programs. Settlement stays in the file for seven years because it describes that you have been unable to pay the balance owed and therefore due to some financial difficulties settled for a lesser amount.

You are not settling your debts in the consolidation program. You will be paying the amount through easy monthly installments. The consultant and the creditor negotiate with each other so that your repayments become easier and as a result late payment fees and other charges are wiped off.

Your credit report will show this program as long as you are taking the services. Once all the debts are paid off, the credit company will report your accounts to the bureaus as 'paid' and the program will be removed from the file. Thereafter, you will have a renewed financial identity in front of your lenders with all your accounts paid off.

I'm two months into debt consolidation. I'm still getting phone calls from creditors. When I started DC in December, I was told not to make any more payments to the creditors and just pay the DC. The credit cards are adding late fees and over the limit fees and said they have now reported to the credit bureau that I am delinquent, even though I wasn't when I went on the DC. So far not good. Will this delinquency be removed? Will the fees be reversed? My balances are going through the roof because of these fees, $100 a month and my credit score, in the high 500s to begin with, is going to go down the tubes if all these credit cards report delinquent. I'm beginning to think to consolidate was not a good idea even though I wasn't getting anywhere toward paying them off. Could someone explain how this is beneficial?

I think most of the fees will be reversed. I would call the consolidation company and ask.

With our consolidation, we were advised to go ahead and pay our creditors if we could, unfortunately I couldn't pay the consolidation and the other bills, so I paid the DC. I did get quite a few calls the first month or two, but once they crditors began receiving payments, they stopped. Ours held back the first month and began working on the proposals. (Our payment comes out of our checking on the first day of the month). On the second month, it took about two weeks for them to get everyone paid, but since then it has been smooth sailing.

Scooter, talk to your consultant as he is well aware of this situation and can suggest you with your next step. I am assuming that he must be involved in negotiating with your creditors and arranging a lower pay off. It takes time for the creditors to stop calling you. But after a period of two to three months, everything gets settled and you stop getting phone calls. Perhaps, your consolidation company is sending the payments to your creditors and you are not aware of it. Confirm your payments status with him.

Regarding all the fees that are getting added to your debt, they can be waived off after the negotiations have been complete. You have to discuss the matter with your consultant to know the latest standing of the negotiation. I am keeping my fingers crossed.