Why Debt Consolidation Could Ruin Your Credit

Debt consolidation is quite possibly one of the worst financial services available to consumers today in our opinion. While the appeal of making one smaller payment a month looks good on the surface, the effects on your credit profile are disastrous.

The Disadvantages of Debt Consolidation
Longer Payment Terms – Just because you’ve managed to get a debt consolidation company to negotiate lower payments doesn’t mean you’ll be paying less money in the end. Sure, your monthly payments are lower, but you’ve probably negotiated terms that are much longer than it would’ve taken to pay off the debt yourself.

The “Stop Paying Creditors” Technique – Very often their methods of debt relief include telling you to stop making payments to your creditors. This is because the older a debt is, the easier it is for consolidation companies to negotiate a lower payment.

A Ruined Credit Profile – When you stop paying all of your bills in the hopes that you can pay less at a later date, you absolutely trash your credit score. By not dealing directly with the creditors or collection agencies to try and work out a plan that both pays them off as well as minimizes the effect on your credit scores, you will be stuck with bad credit for years.

Debt consolidation in our opinion is a worthless, ineffectual form of debt relief. If you're in trouble with credit card debt, you may want to consider debt settlement. The money you think you’re saving will be paid back in the end. There is no quick fix solution, you need to tackle your problems head-on with meaningful debt solutions.