In case you are wondering whether credit consolidation is good for your credit score, there is no easy answer. There are different product designed to build up credit scores, but the short term effects are not always brilliant. In some cases, people fail to tell banks that they are looking for a credit consolidation hummingbird loans payday loans online with direct lender no credit check and get refused. Others do not get the product because they missed some payments. Therefore, you always have to think twice about the overall benefits of debt consolidation before you get started. Read the below tips to find out exactly what credit consolidation does to your credit score.

How Application Affects Your Credit Score

Applying for any type of credit would affect one's credit rating. Indeed, the higher amount one applies for the more it does lower the rating. Therefore, it is essential that you shop around and only submit the application for the consolidation loan once you have calculated the costs, read the terms and conditions and are sure that you can afford the monthly repayments. Even if you do not take out the financial product, the system will think that you have taken out the credit consolidation, so if you apply with another company in a few weeks' time you are likely to be refused. This is something not many people know about, and they simply ruin their chances to get the best deal by submitting unnecessary applications resulting in multiple credit searches.

Closing Your Accounts and Your Credit Score

When you close your account, this action does not always get reported to credit reference agencies right away. Therefore, even if you think that after the credit consolidation your account only shows one hummingbird loans direct lender only tribal installment, this is not the case. First of all; the refinancing company needs to transfer the funds on all your accounts; asking for a settlement figure and any charges. Secondly, the company needs to receive and note the funds before your accounts get closed. You can keep on checking your credit score, and you will see that it takes approximately a month or even more for the old accounts to go. On the other hand, you will only start building up your credit rating once you start making payments on the credit consolidation hummingbird loans installment loans in oklahoma, so it is likely that with a new loan it will hit an all-time low.

Long Term Effects of Credit Consolidation on Your Credit Score

Credit scores are calculated based on the number of credit products you have open, the amount outstanding and the number of repayments you have made. Therefore, you should only have accounts you find necessary and keep the repayments up on the new loan. If you have applied for a high amount credit consolidation loan, it is likely that it will take a good couple of months to rebuild your credit rating to the level it was before you made the application. Still, if you are able to save a couple of hundred dollars a month, it is all worth it.