Consolidation Loans

I’m wondering if anyone can help. My partner and I are investigating the possibility of a debt consolidation loan (personal loan, whatever you might call it) to get out from under a few things that have added up. My fear is ruining our credit. Is it possible to borrow for ‘debt consolidation’ without it impacting our credit? Has anyone done this and/or does anyone have any recommendations? Thanks in advance!

Yes, you can borrow for debt consolidation without it impacting your credit rating. However, there are a couple of things to watch out for.

First- (and this might sound crazy..) do not close any credit lines! Keep them open, but do not carry a balance. Why? Because 30% of your credit score is based upon how much credit you have available to you. If you close an account, it is less credit that is available to you, and will contribute to lowering your score. Keep your credit cards open but don’t use them if they are a problem for you!

Second- Go visit a credit union! They are usually more inclined to help than a bank, and their interest rates a far better than finance companies! Try to visit a federally insured credit union. You can tell if a credit union is federally insured because the word Federal is in their name, and they have the NCUA logo on their advertising material. Federally insured credit unions cannot, by statute, charge an interest rate of more than 18%. This is far better than some places that charge twice that!

I tried to keep credit cards with no balance and the other day one of them sent me a notice saying that because I hadn’t used my card for a while THEY were closing my account. I tried calling them but they had already closed it. I was not very happy to say the least. Why would paying your bills hurt you? If you are getting a loan to pay off debts, but don’t close the cards (credit cards, I am thinking of here), and don’t use it as an excuse to go out and run up debt on the cards again, you should come out ahead.

Hope that this helps. Good Luck!