Consolidating debt hurt credit

Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low.Here are the top things you need to know before you consolidate your debt: But here’s the deal: Debt consolidation promises one thing but delivers another.That’s why dishonest companies that promote too-good-to-be-true debt-relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.Once their fee is accounted for, they promise to negotiate with your creditors and settle your debts. Well, the debt settlement companies usually don’t deliver on helping you with your debt after they take your money.

The right debt solution minimizes the damage you do to your financial future.

Debt settlement companies also charge a fee for their "service." Often, the fee is anywhere from 15–20% of your debt.

Think about it this way: If you owe ,000, your settlement fees would range from ,500–10,000.

Pay attention here, because these crafty companies will stick it to you if you’re not careful.

We’ve already covered consolidation: It’s a type of loan that rolls several unsecured debts into one single bill. Debt settlement means you hire a company to negotiate a lump-sum payment with your creditors for less than what you owe.

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