Finance Tips, Information, and Inside Scoops

1. 4 Responses to “Can debt consolidation have a negative impact on my credit profile?”

2. By John C on Feb 20, 2010 | Reply

   yes it will neg. affect your score substantially. It may make it harder to get a home loan, but so will having several debts. You should try to pay off each account individually. Call your creditors to negotiate down the APR. You may have to wait on that house depending on what all negative info is in your report.

3. By Jeanne R on Feb 20, 2010 | Reply

   Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. There is a better way.

   A. Have a garage sale and sell anything that you no longer need or want.

   B.Get a temporary part time job, if you have one, get another. The holidays are coming and there will be plenty of temporary jobs available. It is better to have a no fun year or two than a no fun decade.

   Here is a plan that can help you. If you work the plan, the plan will work for you:
   1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.

   2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

   3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

   To start :
   Debt #1 (highest interest): minimum payment+ extra payment
   Debt #2 (middle interest): minimum payment
   Debt #3(lowest interest): minimum payment

   Debt #1: paid off
   Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
   Debt #3: minimum payment

   Debt #1: paid off
   Debt #2: paid off
   Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

   That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

   4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

   5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

   5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

   5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

   You can do it and it isn’t as hard as you think. Just follow the plan.

4. By Mike C on Feb 22, 2010 | Reply

   You may get some articles regarding impact of debt consolidation from

5. By George V on Feb 23, 2010 | Reply

   Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one – creditreport.fateback.com

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