Credit card debt is a growing problem as 51 million people have increased their credit card debt due to the pandemic. With high-interest debt piling up, you may be searching for repayment options to help you reduce debt and improve your financial health. One of the most common results you come across is debt consolidation.
This method has advantages and can better your financial situation. But for some reason, people are hesitant to select this option not because it doesn’t work, but because of its misconceptions.
Below we debunk the idea that debt consolidation loans hurt your credit, and reveal why they are a great strategy for debt repayment.
Consolidation Loans Don’t Hurt Your Score, Credit Cards Do
One of the most asked questions about debt consolidation loans is if they hurt your credit. This is not true. Lenders use your credit score as a factor to determine how much you can borrow on a personal loan to consolidate debt. To discover your score, a lender must complete a soft inquiry on your credit. Examples of a soft inquiry are when you check your credit or get preapproved for a loan – like a debt consolidation loan.
The misconception that consolidation loans hurt your credit score may stem from soft inquiries. A lender will do this during the application process. What WILL impact your score are hard inquiries, like opening new credit cards. Opening and having too many accounts at once can significantly lower your credit. Learn more in the article below.
Related Article: What Makes Up a Credit Score?
Consolidation Loans Can Actually Improve Your Credit Score
While we’re on the roll of debunking myths, you may be surprised to discover that debt consolidation can improve your credit score! It’s not too good to be true! By consolidating your debt into one account, paying off debt becomes more manageable for two reasons: a single monthly payment and a lower fixed interest rate.
A combination of these factors allows you to make payments. They are often lower than a credit card payment and have less interest overall – as long as you don’t extend your terms. Our best advice is to ensure that you pay your balance on time each month. Over time, you will create a history of responsible credit. And you’ll see your credit score improve!
Find a Consolidation Loan Fast with Lendah
Now that you have an understanding of consolidation loans and their impact on your credit, you may need help searching for one. Instead of going lender to lender, start your search with Lendah. We make finding your debt consolidation loans within your budget easy! With a network of over 30 lenders, you can cast a wider net and get all your options in one place. Best of all, you only need to fill out ONE application and you choose what works for you! Let our team help you improve your financial situation so you can get out of debt once and for all!
If you have questions about debt consolidation loans, speak to our team of knowledgeable professionals. Our compassionate loan matchmakers will find the best terms tailored to your unique situation with fast approval and rates starting as low as 3.84% for amounts up to $100,000.
Get started today on our website. Prefer to talk in person? Call us at 833-453-6324 and we’ll get you connected immediately with one of our loan experts.
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