Credit Card Debt Consolidation Method

The first question is, “Why should you consolidate credit card debt?” If you’re having no trouble with your credit card debt repayment, you don’t need to consolidate. However, if you’re having difficulty making your monthly payments, then consolidating your debt may be right for you.

Consequences of Bad Debt

If you have bad debt, including bad credit card debt, on your credit report, you’re going to pay for it. You’ll have a much harder time getting credit or loans; when you do get credit, you’ll pay more for it, with higher interest rates; and since many insurers and employers check credit, it may stop you from getting insurance or a job.

FICO Impact on Credit Card Debt?

Your FICO score is your credit score. While the exact formula(s) for determining it are almost as secret as Coca-Cola’s recipe or nuclear launch codes, in general, it looks at how much credit you have, how long you’ve had credit, how much of your available credit you’re using, and your payment history. Credit card utilization and payment are factored into your FICO score; in fact, the credit card debt FICO impact can affect all those elements. For example, if you have several cards, you’ll have more credit available and probably have a longer credit history.  However, if you max out on your cards, or worse, default and have bad credit card debt, you may have a bad ratio of debt to equity, bad payment history, and may have cards closed down—resulting in less available credit and eliminating some of your longer-standing credit. In short, bad credit card debt can hurt your FICO score in numerous ways.

Consolidation of Credit Card Debt

Sometimes, if you’re in financial distress, a lender will let you delay, or defer, payment, until times look up. However, deferred credit card debt doesn’t go away—it’s still waiting in wings to pounce. Deferring your debt is respite, not a solution.

That’s where debt consolidation comes in. When you consolidate, you pay off a number of different, typically shorter-term or higher-interest debts, with a single, usually longer-term and lower-interest, loan. It doesn’t reduce what you owe in total (in fact, by stretching out payment, it may increase the total amount you’ll pay over time), but it does simplify your debt and, more importantly, provide a way to lower your monthly payments.

Credit Card Debt Consolidation Law Assistance

There are a number of wrinkles to dealing with debt, including by debt consolidation—understanding any fees or costs, making sure that paid-off debt is fully settled, making use of any tax advantages that certain kinds of debt has, etc. Getting advice from a credit card debt consolidation attorney experienced in credit card debt consolidation law can make sure that you pick the option that’s right for you and that it’s carried out properly.