It uses a complex mathematical algorithm to come up with a score that predicts whether you are more or less likely to default on your next loan.
Consolidating all your debts into one loan might appear to make life easier but there might be much better ways of dealing with debts.
And this is true no matter what path you take to resolve your debts.
How little time it takes for your credit to bounce back, or to get approved for different types of financing, may surprise you.
Here are 10 myths about debt consolidation and the truth about them.
Your credit reports and credit score will heal and bounce back given time.
There are far too many misconceptions (and incomplete summaries), about credit reports and the harm that comes from credit counseling, settling debt for less than what you owe, or how bankruptcy will stop you from getting approved for credit.
After more than 20 years of helping people with debt problems, I can say with certainty that there is too much focus on the credit report and credit score when what is being sought is debt relief.
Optimally, you want to never go above 50% utilization for the sake of your credit score, and 20-30% is better.
If you close the open account while working to pay down the balance, you wreck that part of the calculation and your credit score may suffer.