Those blanket debt consolidation loans offered by debt consolidation companies can sometimes seem like an appealing way to manage both business and personal debt. However, debt consolidation has its drawbacks for both business and personal credit. Let’s talk a little about each.

Personal Credit:

On your personal credit report, debt consolidation can have several rather negative effects. Often when people use debt consolidation, they close all the credit accounts that they are consolidating. Often people convert their unsecured credit cards to a single installment loan.

For people who close accounts, the closing of those accounts generally hurts their credit score. Closing credit card accounts reduces their “high credit limit” and hurts their debt to credit ratio. They also reduce the number of open positive accounts they have, and reduce the variety of credit types they are utilizing.

Furthermore, the debt consolidation loan typically involves a hard inquiry on their credit report. All of these factors have a generally negative impact on a consumer credit score. The changes in credit utilization (debt to credit ratio) alone can cause a significant credit score drop, since credit utilization accounts for over 30% of a consumer’s credit score. The negative impact of consolidating debts can be drastically reduced by keeping the credit lines/credit cards open rather than closing them.

Business Credit:

The scoring rules for business credit are different, but they serve the same purpose... so we can expect some of the same effects. If you keep your accounts open when consolidating business credit, it could actually boost your business credit scores because those accounts will show as being paid off.

If a business uses a debt consolidation company (versus a consolidation loan from a bank), this is likely to be viewed negatively by future lenders and investors. Debt consolidation loans from banks, however, are often quite helpful to businesses and usually do not have a serious negative score impact--as long as the consolidated accounts are not immediately closed.

For Businesses And Consumers:

The bottom line on debt consolidation is that it can be a real life saver if done correctly. Blanket debt consolidation loans that consolidate a large pile of either consumer or business debts into a single large debt are usually a bad idea because they take away other possible options for dealing with the debts. However, sometimes debt consolidation is a necessary and valuable tool that can help businesses and consumers restructure their debts into a more affordable and manageable form.

Contact us today for a FREE credit assessment at www.goodcreditwithchris.com. #credithelp #creditwithchris

 


Comments

Death consolidation is managed and invoked for the exact and pertinent information. It is very necessary and beneficial if the death toll is controlled and all humans are saved from bad ailments and allmedcal problems. It is done and deduced for the right and exact conception.

Reply
04/07/2016 4:53am

This article assists by supplying helpful info. I would certainly suggest others to look at the article and also obtain your understanding boosted-up.

Reply
07/05/2016 2:46am

Ok, I will contact you to ask some questions.

Reply
07/26/2016 6:29am

Hello me and my friend who works in childcaresales.com.au as business advisor, Try not to suffocate in your non-contract obligations! On the off chance that you will instruct yourself now you will understand that you have numerous choices, particularly in the event that you are a property holder. A home loan Debt Consolidation credit might be the answer for you.

Reply
09/12/2016 6:52am

Personal loans are easily available online with desirable options for the borrowers. With secured and unsecured options you can choose according to your requirement.

Reply
09/24/2016 2:07am

If you are looking to buy a truck, trailer or any other commercial vehicle for your business, this handbook will help you in choosing the most suitable truck and the right truck financing arrangement.

Reply
11/11/2016 4:49pm

There is an amazing amount of confusion, or more accurately obfuscation, in the world of money, finance, and economy. The 'powers that be' at the Fed and the Treasury claim that one needs at least a PhD, if not a Doctorate to understand what is going on in the economy.

Reply
12/17/2016 2:37am

Reply
01/26/2017 3:30pm

Debt is an ever increasing problem in modern times. With more and more people struggling with debt problems, solutions to debt have become increasingly important. Debt management is something many people need, but are to ashamed to ask for. The road to debt freedom is long, winding, and treacherous, but you can drive down it safely with just a little help.

Reply
01/26/2017 4:24pm

Are you in need of cash fast? Well, if you're looking for a way to get cash quickly and easily then you can stop looking. Stop searching and apply for a payday loan online.

Reply
02/03/2017 1:49am

from time to time releasing up space in your private home is just exact for the soul. if you have been a collector or accumulator over the years, absolute confidence your possessions are stuffed into every to be had corner and cranny. check out this website credifin-nederland.nl to know more about finance.

Reply
03/01/2017 8:54am

I am always searching online for articles that can help me. There is obviously a lot to know about this. I think you made some good points in Features also. Keep working, great job!

Reply
04/13/2017 7:48am

I understood more about debt consolidation, how it works for us. More easily explain the debt consolidation combines multiple debts without collateral, all kinds of charges into one charge. Instead of having to write a check to the lender every month, we can consolidate bills into one payment, and write one check. This helps eliminate errors resulting in the incorrect amount or late payment. It is also useful to us are not too careful. Articles that you have a very nice! This is important information for me. I can know the deficiencies or the advantages of debt consolidation effect. Some things on credit or debt collection I also learned to expand my knowledge. If you want to also know about credit or debt collection, you can visit this site www.credifin-nederland.nl/incassodiensten/gerechtelijke-incasso

Reply
04/19/2017 5:15pm

The vaunted MBAs of two decades ago provide information that is often too general to meet the needs of today's internationally oriented finance industry.

Reply
04/23/2017 8:26am

In recent years there has been much unfavorable publicity when it comes to companies that offer credit repair counseling. It has become public knowledge that many such counselors have been caught deceiving their clients and betraying the trust that was placed in them.

Reply
04/25/2017 8:20am

When we are trying to understand Personal Finance, the best thing to do is to understand what Personal Finance is NOT. Many people think that accounting and personal finance are the same, but Personal Finance is NOT Accounting. On the surface they may seem the same; they both have something to do with money.

Reply
05/07/2017 1:55am

Business turnaround, also known as business turnover is a process of dealing with a company's business debts by determining how much the company makes in terms of sales and assets. It is a weighing scale of a company's revenue and total gross amount of sales received for each year the business is standing.

Reply

Thank you so much for taking the time for you personally to share such a nice info. I definitely enjoying every little bit of it. It is a great website and nice share.

Reply
07/19/2017 4:46am

Debt consolidation is useful as a saver when paying interest on debt or in other words: owe again to pay off other debts. The best .. immediately pay off the debts and do not add new debt. For solution of your debts with your debtors either corporate or private debt you can use the services of credifin-nederland.nl; Their fast respond and outstanding settlement made it all work out. There is nothing like them in terms of transparency and professionalism.

Reply
07/20/2017 9:34pm

In terms of debt consolidation, it means combining several large loans into one single loan. With consolidation, it is possible for people with lots of debt, to incorporate them into one larger loan with low interest rates. But for every debt there must be a profit and a loss. To avoid losses or bankruptcy, you start trying to have insurance to protect you. Insurance is not only to protect yourself but also to guarantee your old age and your vehicle. All of them have their respective functions and to choose to use insurance you should know about the insurance is more. Please visit this site www.netpolis.nl to know about insurance.

Reply



Leave a Reply