SOURCE: Total Debt Relief

February 08, 2010 13:10 ET

Debt Consolidation & Your Credit Report: The Correlation Explained

With Debt Being a Part of Everyday Life for Most Americans, Consumer Advocate Breaks Down the Effect Which Debt Consolidation Has on One's Credit Report

CHICAGO, IL--(Marketwire - February 8, 2010) - Debt in the form of a monthly mortgage payment, car payment, credit cards and student loans are typical in most people's lives. The ready availability of credit, especially during the economic boom period before the recession, has caused many consumers to go far into debt, leading many to wonder and ponder about such things as debt consolidation as well as its effect on one's credit report.

Debt Consolidation is a debt relief / credit card relief program which aims to reduce and eliminate debt. In the long term, debt consolidation or debt consolidation loan as part of a debt relief program will indeed make it easier to pay off debt and improve one's credit score in the process. In the short term, debt consolidation may cause an initial drop in score on one's credit report.

In a debt consolidation program, counselors work with a consumer's creditors to negotiate new terms, better terms, and a new payment plan. These elements help to stave off a bankruptcy -- the ultimate destructor of a consumer's credit report. As has been revealed by FICO, a bankruptcy can cause almost an immediate 300 point drop on a consumer's credit report.

While a debt consolidation repayment plan is being negotiated, open balances might be suspended by creditors, or they might be recorded as late payments. The result of this is that a consumer's credit score could drop a little during this process. It's a small price to pay for having one's debt renegotiated and allowing one greater financial freedom each month and greater peace of mind.

Once a consumer is in a debt consolidation debt reduction program, it can take 6 months or so before an improvement is seen in one's credit report. And in fact, continued timely payments while in a debt consolidation program work to the advantage of a consumer, typically raising their credit score to a higher level than prior to entering the debt consolidation program.

Total Debt Relief offers consumers a free debt evaluation which can be taken advantage of at the company's website:

Contact Information

  • Contact:

    John Chase
    877-224-2950 x 7016