Is consolidating credit card debt a good idea

You then make monthly payments to Avant to pay off your loan. Conversely, making on-time payments should improve it. HOW IT WORKS: The qualifying standard is at least ,500 of debt.

You open an escrow account and make monthly payments (set by National Debt Relief) to that account instead of to your creditors. CREDIT SCORE IMPACT: It’s a huge negative and it lasts for seven years.

That is what credit counselors should do for you.” TYPE: Nonprofit Debt Consolidation.

HOW IT WORKS: A credit counselor asks questions about your income and expenses to see if you qualify for a debt management program.

When the balance has reached a sufficient level, NDR negotiates with your individual creditors in an attempt to get them to accept less than what is owed. Expect your credit score to drop 75-125 points as your bills go unpaid and accounts become delinquent.

If a settlement is reached, the debt is paid from the escrow account. In Charge (nonprofit debt consolidation), Avant (debt consolidation loan) and National Debt Relief (debt settlement) each represent different segments of the debt consolidation industry.

The third – debt settlement – is used in desperate situations where the debt has reached unmanageable levels.

Avant requires a minimum score of 580 with an annual gross income above ,000. LENGTH OF TIME: 2-5 years with no penalty for early payment.

If approved, you receive a fixed-rate loan and use it to pay off your credit card balances. CREDIT SCORE IMPACT: Applying for a loan has no effect on your credit score, but missing payments will hurt your score.

If you enroll in the program, you agree to have In Charge debit a monthly payment, which will then be distributed to your creditors in agreed upon amounts.

In return, credit card companies agree to lower interest rates to around 8% (sometimes lower), which results in lower monthly payments.

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