Debt Consolidation Loans
Will applying for (and receiving) a debt-consolidation loan damage my credit?
I have numerous debts (car payments, student loans, a few credit cards, and a signifcant personal debt owed to a friend) that I’d like to roll into one monthly payment (which would hopefully be smaller than the amount I currently pay for each one as a separate monthly bill).
Some people have advised me to apply for a debt-consolidation loan. My question is, will doing so affect my credit negatively? Do they even include student loans in debt-consolidation?
A debt-consolidation loan is just a fancy word for a “new” loan at the same banks you borrowed from before. It doesn’t hurt your credit because the amount owed has not increased.
A debt-consolidation “service” tries to charge you $1,000 to get lenders to reduce your debts. You make one payment each month to the “service” and they pay everyone you owe. This is an area of business which is 99% scammers so you need to avoid them.