If you make use of a balance transfer offer and move all your balances to a new credit card, you will immediately increase your total credit limit.
Using the example above, let’s say you transferred your three credit card balances onto a new card.
And for further reading, check out our article, “Is Debt Consolidation a Good Idea?
Now you have ,000 on your new card, and it has a credit limit of ,000.You also still have your old cards (with a total credit limit of ,000), so your total credit limit is now ,000 and your credit utilization is 15%.After all, paying off your debt will help improve your credit score in the long run and save you plenty of money in interest and fees!——— Hopefully the information above is helpful not only in answering the question “does debt consolidation hurt your credit score?But of course, before you can decide if it’s the right choice you have to answer some important questions.
One of the most important is, “does debt consolidation hurt your credit score?
As explained above, doing debt consolidation can hurt your credit if you close your old accounts afterward.
But you can’t leave them open if you’re going to start spending on them again – after all, that defeats the whole purpose of using debt consolidation to destroy your debt, right?
Also included in your report is a history of the payments you’ve made on time, and those you have paid late (or not paid).
The 3 major credit bureaus (Equifax, Experian, and Trans Union) compile this information and make it available, along with your credit score, to lenders who want to find out how creditworthy you are.
Of course the problem is that there is an inherent temptation in leaving those cards open. Check your rate using Ready For Zero's free debt consolidation tool.