Consolidating debt credit score

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Here are the questions you must answer in order to figure out if debt consolidation will hurt or help your credit in the long run: There are three main ways of doing debt consolidation: Each of these three methods requires a hard inquiry on your credit, which is the same as when you apply for a new credit card, submit a rental application, or get an auto loan.The hard inquiry will lower your credit score by a few points and stays on your credit report for two years.Using the example above, let’s say you transferred your three credit card balances onto a new card.

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If you have 3 credit cards, each with a credit limit of ,000, and you have

If you have 3 credit cards, each with a credit limit of $5,000, and you have $1,000 of debt on each card, then your total credit limit is $15,000 and your total debt is $3,000 – which means that your credit utilization is 20%.

For some people, debt consolidation will be the best option because it can allow you to group all your debt together, thereby making it easier to manage your debt – and in some cases lowering your monthly payment and interest rate at the same time (see our article on how debt consolidation works).

But of course, before you can decide if it’s the right choice you have to answer some important questions.

But wait, what if you decide to close those 3 old credit cards?

Then your total credit limit would only be $5,000 and your credit utilization would be 60% – which is well above the recommended threshold and would certainly hurt your credit score!

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If you have 3 credit cards, each with a credit limit of $5,000, and you have $1,000 of debt on each card, then your total credit limit is $15,000 and your total debt is $3,000 – which means that your credit utilization is 20%.For some people, debt consolidation will be the best option because it can allow you to group all your debt together, thereby making it easier to manage your debt – and in some cases lowering your monthly payment and interest rate at the same time (see our article on how debt consolidation works).But of course, before you can decide if it’s the right choice you have to answer some important questions.But wait, what if you decide to close those 3 old credit cards?Then your total credit limit would only be $5,000 and your credit utilization would be 60% – which is well above the recommended threshold and would certainly hurt your credit score!

,000 of debt on each card, then your total credit limit is ,000 and your total debt is ,000 – which means that your credit utilization is 20%.

For some people, debt consolidation will be the best option because it can allow you to group all your debt together, thereby making it easier to manage your debt – and in some cases lowering your monthly payment and interest rate at the same time (see our article on how debt consolidation works).

But of course, before you can decide if it’s the right choice you have to answer some important questions.

But wait, what if you decide to close those 3 old credit cards?

Then your total credit limit would only be ,000 and your credit utilization would be 60% – which is well above the recommended threshold and would certainly hurt your credit score!

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