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Debt consolidation is typically used by people who have mounting debt and want to reduce the number of lenders they have to pay each month.While eliminating or lowering your debt may help your credit score over time, debt consolidation is not typically used as a strategy to increase your credit score.Debt consolidation has the potential to help or hurt your credit score—depending on which method you use and how diligent you are with your repayment plan.The strategy is considered in situations where people want to streamline the repayment of multiple high-interest debt amounts—often with the hopes of saving money and lowering their debt burden.Credit utilization accounts for 30% of your credit score.Imagine if you have one credit card with a limit of ,000.Consolidating your bills will help you reduce bill clutter, and will possibly provide lower rates. P2P Credit makes applying for a debt consolidation loan hassle free.Simply click apply, select your estimated credit score, and provide some basic information about your financial situation.
Having less than perfect credit shouldn't stop you from receiving the benefits of consolidating your debts.
By rolling medical debt into a debt consolidation loan or by paying for it with a low-interest credit card, you would have to pay the interest on new account—which in some cases could be more than the original rate.
In 2017, the three major credit bureaus added a policy that gives consumers a 180-day grace period to resolve outstanding medical debt before it appears as past due on their credit reports.
As you roll revolving credit debt into a debt consolidation loan, and if you keep your balances on those accounts low, this can help to reduce your credit utilization and in time help boost your credit score.
While you can consolidate many different types of existing debt, it is important to first know what the interest rate is on your current loan in order to see if debt consolidation will be helpful.