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The answer to this extremely important question is absolutely not. This is just one more of the huge number of misconceptions that surround debt consolidation. In fact, it is far more likely that consolidation will be the only thing that keeps you from having to go into bankruptcy, and that by consolidating, you will keep your credit report sound, so that you look like a good debtor for anybody who is considering lending to you in the future.

This rumor about debt consolidation was probably started because of a single thing that consolidation companies are able to do excellently. This is that they will bargain with your creditor on your behalf and try to get the creditor to settle for less money than you owe, if you are consolidating because you are having trouble paying your debt. If they succeed in getting a bargain, those debts will show up on your credit report as settled, which creditors see as you being unable to pay them. You would kind of be “declaring bankruptcy” on those particular debts, but that’s the closest that you will get. The consolidation itself will not show up on your credit report as a bankruptcy. It’s really just a glorified type of refinancing, as you are taking out another loan to cover your previous debt.

Otherwise, beyond this rumor, it is also unlikely that debt consolidation will have any negative effect on your credit score. The settling of the debts, as discussed before, is the only real negative effect on your credit report, but there are quite a few positive effects. For example, you are closing open lines of credit, given a great opportunity to lower your debt to income ratio, and you receive free financial counseling services, which can help you raise your credit score through other means. All of these are positive, meaning that after you go through the entire process, you'll probably find that your credit reputation has increased, rather than decreased. I highly recommend that anybody who is having financial trouble investigate debt consolidation as a solution. It does not deserve the bad reputation that it has attained.

In a nutshell, by a thoroughly researching and then comparing several debt consolidation services, borrowers will be able to qualify and determine the agency that meet your specific financial situation, plus the cheaper interest rate the market is offering. For Instance, read our latest debt management company review: PriorityDebtSettlement Review.

However, it is advisable to work with a seasoned and reputable debt counselor before arrive to any conclusion, this way you will save time because of specialized advise and cash by obtaining the best results in a reduced period of time.

H. Milla runs the Best Debt Relief Programs website – by visiting you can see his top rated debit consolidator company recommendation.

Find free online debit consolidation resources and bad credit debt management advise respectively. Further information by clicking the link you are interested on.

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Tags: Debt, debt consolidation, debt relief, debts