Does consolidating credit card debt hurt credit score
Many creditors will enroll you in their special reduced-interest programs if you approach them as an individual.The pain comes in making all those phone calls and knowing what to ask for.“But it doesn’t because people always think they’re smart enough to find the deal no one else has,” he says.That would be true if these debt-management programs involved negotiation. A majority of creditors have existing programs where they automatically shuffle off 95 percent of individuals enrolled in a DMP, says Greenberg.
“If you’re going to take this route, you might as well declare bankruptcy,” Greenberg says.
The second question Greenberg asks before signing with a DMP: Is your credit rating pristine?
If you’ve managed to pay your bills on time to this point, know that this step will muck up your credit history.
If you are considering debt-consolidation options, avoid these misrepresentations: Credit counseling involves helping consumers develop a budget and the discipline to make steady payments to clear their debt loads. “Most of these individuals make a decent living, but at the end of the week don’t have enough money and don’t understand why,” says Joel Greenberg, president of New Jersey-based Novadebt.
Debt-management programs — or DMPs as insiders like to shorten it — are one tool in the credit counselors’ kit.And most folks who walk through his doors haven’t missed payments, says Greenberg.