Millions of Americans are plagued with credit card debt. The high monthly payments seem like a never-ending cycle of financial struggle. Consolidating credit card debt can be a smart move. Consolidating debt with companies like Symple Lending helps reduce monthly payments and can lead to lower interest rates, helping you pay off debt sooner instead of later. However, many people worry that this move can hurt their credit score. This article will cover everything you need to know about protecting your credit score during the process.
Short Term Effects
It’s important to note that there are often short-term impacts on yoru credit score. You may notice a negative mark on your credit report because you’ve missed a payment. Some lenders perform a credit check during the approval process, too. However, these negative impacts are often short-term. In the long run, you’ll typically notice an improvement in your credit score because your credit card debt will be resolved. It’s crucial to have patience and trust the process.
Credit Report Inquiries
It’s crucial to work with a lender to determine your options. Many lenders will conduct a credit check. This can show up as a hard inquiry on your credit report. However, you’ll have one monthly payment instead of several. If you make monthly payments on time, the one hard inquiry on your report won’t significantly impact you. Some lenders conduct a soft inquiry check, which doesn’t hurt your credit score as much. Make sure you ask a lender like Freedom Debt Relief before they conduct a credit check.
Managing Your Credit Score
You can take several steps to manage your credit score during the debt consolidation process to ensure the best possible outcome. Research several companies instead of asking multiple companies to do a credit check to see if you apply. This will reduce the number of hard inquiries in your report. Avoid new loans while you work to increase your credit score. Check your credit score monthly to ensure you have good credit and are aware of any new marks on your credit report.
Avoid Closing Old Credit Accounts
It’s tempting to close off paid-off credit card accounts to avoid the temptation of using them. However, open accounts can have a positive impact on your credit score. Open accounts show that you can use credit responsibly because you have a low credit utilization. You can spend small amounts on your credit card and pay it off weekly to help your credit score. For example, some people use their credit card to put gas in their car and then pay it off when paid. This is a great way to use your credit card to increase your credit score.
In Conclusion
Once your debt is consolidated, the most important thing you can do to protect your credit score is to make on-time payments. Payment history accounts for 35% of your credit score, making it the most significant factor. Set up automatic payments or reminders to ensure you don’t miss any payments, as even a single late payment can hurt your score. Paying off your debt on time can also gradually improve your credit score over time. Consolidating credit card debt doesn’t hurt your credit score when done correctly.
