Thinking of consolidation. Need to know its effect on credit

Hi Guest

Welcome to the forums.

If you are considering for debt consolidation program, you are seeking to improve your financial standing. Your credit report might be having some negative entries which need to be recuperated. Debt consolidation program will cover all the unpaid accounts in the program, making regular payments to the creditors and as a result provide you a better financial rating.

Debt consolidation program will be shown in your credit report and your creditors will appreciate that you have taken this responsibility to clear off your past debts and regain your financial worthiness. They will come to know that you have experienced financial difficulties in the recent past and you have taken active steps to repair it through the debt consolidation program.

Your creditors report your accounts to the credit bureaus. Although your report will show that you have been unable to pay the original amount of the creditors and have accepted the reduced amount through the debt consolidation program, the consultant working in the debt consolidation program will be able to negotiate with your creditors for the best of your credit ratings.

The ultimate goal of the debt consolidation program is to improve your financial and credit standing and as long as you are current in the debt consolidation payments, you will be viewed more favorably than before.

Regards
Roxette

If I am understanding Roxette's e-mail correctly, the debt consolidation goes on your credit report, lowering your FICO score in the short term. Do I have to wait until the debt consolidation is complete, 3-5 years, before my FICO score recovers?

Hi Illuman23

Welcome to the forums.

Your FICO scores are already lowered if the accounts are in default or it might be steady due to your accounts being current.

The debt consolidation program will be a tool contributing payments towards your debt accounts thereby increasing your FICO scores from that point.

Consolidation program will appear in your credit report without affecting your scores. Your scores are calculated depending upon the payment history and this program makes its effort to complete it.

What I want to say is that this program will be a good choice if you want to reshape your file and improve your payment structure. All your debts will be cleared and you will have a new credit identity in front of your new lenders.

How will it effect my taxes in 2010? Will i have to pay in alot? We are doing this because we can't afford all the bills and are worried that we are going to have to pay in alot.

I've looked at a few Consolidation Companies. they SEEM good..on paper, anyway. When I called them, they were telling abo0ut about their programs, etc. However.....they wanted "a few for this",..or.."a fee for that", etc. If I could pay on some of the 'small' outstanding debts I have, i would (just venting, a bit, here). I don't think Debt Consolidation is for everyone....whatever 'works for one person, may not work for another.' I guess, you need to do what 'works' for you.