Credit Consolidation

[Anonymous]

Hello-I need help, I have been paying all my credit cards on time but only pay the minimum. I have no reported late payments. I have to many credit cards and my balance never goes down much. My Credit scores are in the low 600's. I want to use a debt consolidation company. I think it will work for me to close my cards and pay one payment a month to the agency. My question is how will this affect my credit score and if it does impact me negatively how long will it take to repair and will it damage my chances of refinancing my house? The agency said that the creditors would note on my credit report that a third party was paying my bills and that it should not affect my credit rating. I am somewhat skeptical. The agency figured that it would take 40 months to pay off all accounts.

Thanks for any help.

[vawt]

I think you should try to negotiate with your credit card companies yourself.  The debt management is just going to try to get reduced rates and then charge you to make your payments.  A lot of times you can do the same thing without that extra fee on top.  Try doing a spreadsheet to see if you can figure out there 40 month timeframe.

Some places will even hurt your credit and could be scams, so be sure to really check them out first.

Good luck!

Message Edited by vawt on 03-12-2009 09:33 AM

[shalane85]

Samboo,

Whatever you do do not close your accounts or use a debt management program. What are the CC you have, balances, % rate?

You may want to try posting this under the Credit card forum. You will get alot of feedback that way.

[marty56]

I have successfully used a DMP program.  The 2 reasons you might consider using one is to get the interest rates lowered and to break out of the credit card/new credit  habit if you are having problems in managing your use of credit.

You could also try the Debt Snowball approach on your own where you make minimum payments on all accounts except for the one with the smallest balance.  On that one you pay as much as you can extra until its PIF, then attack the next smallest balance and so on.

[Anonymous]

Per MyFICO, there is no affect on the credit by enrolling in a credit counseling program. 65% of your credit score will actually be improved by the program simply by lowering your debt amounts faster and showing a perfect payment history through the life of the program. These are all facts verified by information from FICO on this website.