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This is typically the most important question that a person asks when considering a debt consolidation service. Many times the credit card companies do not want people consulting these types of services and will do everything in their power to convince you not to do it. Often talking about the negative effects it will have on your credit score. Do not be intimidated; get the facts so that you can decide if debt consolidation is for you. There are actually a few different options available to people looking for debt consolidation. Each option has different effects on your credit score.

Credit Counseling

Credit counseling has no effect on your credit numbers, meaning your FICO scores, but it can effect how creditors view you. Credit counseling works in a way that will make some lenders believe that you are high risk, and they will be more reluctant to extend credit. You may have to accept a higher rate, until you can prove yourself to the creditor. The reason for this is that credit counseling is a way of paying off debts where you give control over the payments to the counseling agency. This shows that you are not able to handle your debts. So while it has a negative impact, it is not on your score, rather as a notation in your credit report.

Debt Settlement or Negotiation

This option has a very negative rating on your FICO score, but it is usually for a short period. In this sort of debt consolidation service, you make payments to the agency. The agency negotiates how much the creditors will take. This is typically the fastest way of getting debt free, and offers the best chance to save money. The negative effect on your credit rating is normally only as long as the settlement terms. Since you're able to save money during this time, you are in a position to build credit quickly.

Debt Consolidation Loan

For people that are concerned about the impact that debt consolidation may have on your credit report, then this service you need. It has no impact on your credit rating. This is because you are paying off your full debt. You accomplish this using equity that you have built up in property. In some cases they do not require property, but expect that you will pay higher rates if you don't have collateral. If equity in a home is used, then your interest rates are low, and you may be able to write off the interest on your taxes. Of all the debt services, this is by for the most credit rating friendly.

In a nutshell, by researching and then comparing not one but many debit consolidation services, consumers are able to select the service that meet your your very own financial situation, plus the cheaper interest rate available on the market. Nonetheless, it's advisable working with a trusted and reliable debit counselor before even make any decision, this is the way you will save time through specialized advise & cash by obtaining better results in a reduced span of time.

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Tags: Debt, debt consolidation, debt relief, debts