Consolidating debt hurt your credit

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The agency should be organized, send payments and statements on time and offer strong consumer education and support. The payment is usually around 2.5 percent of the total debt, though in hardship situations, there is some wiggle room. Why consolidate bills if you can't pay for basic expenses or if there are better alternatives?

You can stop the plan at any time, and you can also pay more -- and get out of debt faster -- when you have extra funds. You wouldn't, which is the reason consolidation begins with a counseling appointment where your entire financial situation is assessed.

The counseling agency will have some set criteria they use that will identify which of your accounts can be accepted into the debt management (DMP) plans they offer.

The credit counselor uses their automated system to contact the credit card companies you owe, putting forward a repayment plan.

While it's important to know what things help you build a good credit score, you also have to know the actions that could hurt your credit score. Thirty-five percent of your credit score is your payment history.

The method used to get your payments lower than what you may be paying today is simple enough to explain; your banks agree to lower your interest rates, and consolidate all of your payments into a single payment. With a debt management plan, you make one payment to the credit counseling agency, which distributes the money to your creditors until they are paid in full.Even if they are members of such organizations, though, be picky. So while the agencies and employees vary, the plans are all structured the same way: Your counselor determines how much it will take to pay your creditors in full in three to five years.Pay your credit card bills on time to preserve your credit score.Creditors often use third-party debt collectors to try to collect payment from you.

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