Will debt consolidation better my credit?

The answer to this question is a definite “maybe.” The fact is, only you can determine whether debt consolidation will help your credit, and you’ll base that decision on your current financial status.

Start this process by keeping in mind those things that do help your credit. Regular monthly payments that are consistently on time are among the best things you can do for your credit. With that in mind, the next step is to evaluate what effect your current actions have regarding outstanding debt.

Each time you send in a credit card, mortgage or other payment late, that’s noted on the account. If you’re constantly sending in your payments even a few days late, you’re doing some real damage to your credit report. If this sounds like you, it’s time to take some positive action.

But life isn’t always easy and everyone encounters a problem making timely payments now and then. That’s true, but it’s up to you to take steps toward protecting your credit when life throws you a curve. Our natural instinct is to dodge those creditors when they call. Rule number one – Don’t! Not only should you answer the phone or return the call, you should actually make the call first.

If you realize that you’re not going to be able to make your payment on time, call the creditor and let them know. They might offer you a brief forbearance or make some other arrangements that will keep the late payment from making a mark on your credit. In the case of a loan, you might be given the option to pay only the interest due this month with the balance of the payment tacked onto the back of the loan. Similar arrangements can often be made with many creditors.

One problem some people face is that they’ve gotten themselves tied to several small payments. Adding another payment of only $40 per month didn’t seem like it’d be a strain on your budget – but the third, fourth and fifth payments (even though they’re all small) have added up to a serious problem.

Either of these situations and many more can be the catalyst behind your decision to do some debt consolidation. There’s no doubt that a debt consolidation loan can lift the strain of being behind or simply facing too many smaller monthly payments.

It only takes a minute to start the process. And one of the best benefits of debt consolidation is that you’ve now got the opportunity to make payments on this new loan on time, every time.