But, before applying, be sure to ask about the lender’s credit requirements.
Keep in mind that you’ll need Be sure to check out any potential online lenders with the Better Business Bureau before applying for a debt consolidation loan online.
And if you make your credit card or loan payments as agreed, you’ll establish a positive payment history, which affects your credit scores more than anything else.
(Payment history accounts for 35% of traditional credit scoring models.)Transferring credit card balances, paying off credit cards with a personal loan or enrolling in a debt management plan is only the beginning of credit card debt consolidation.
A lender may lower the interest rate on your credit card balance when you participate in a debt management plan.
Debt management plans typically last three to five years.
With a debt management plan, you make one monthly payment to a credit counseling agency and the agency pays each of your credit card lenders.Here’s how credit card consolidation works: You first decide if you want to take out a new loan, open a new credit card or enroll in a debt management plan (more on that later).Whichever option you choose, you will use it to pay off your multiple balances.One of the first things you’ll want to do is check your credit reports for accuracy.An error on any of your credit reports could prevent you from qualifying for the debt consolidation help you need, so .(Not every creditor has to participate, so you may be able to keep a credit card out of the debt management plan if you need it to remain open for travel or business purposes, for example.)Once you complete your plan, some of your creditors may re-establish your credit based on your new, debt-free status and the on-time payment history you established through the course of the debt management plan.Other ways credit card consolidation can hurt your credit: Applying for a new line of credit results in a hard inquiry on your credit report, adding a new credit account can lower the average age of your credit history and a new personal loan will show that you have a high level of outstanding debt (your scores should improve as your remaining balance shrinks from where it started). Adding a personal loan to your credit history can improve your mix of accounts (it’s good to have a combination of installment and revolving credit, like credit cards).Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser.It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.The best way to consolidate credit card debt — and whether consolidation will work for you at all — depends on your situation, so you might want to consult a non-profit credit counselor about your best options.The following five tips can help you figure out which credit card consolidation strategy suits you best.