As debt consolidation and credit rating are interrelated you should understand their effects on your financial life. People who are deep in debt usually have a low
credit score. When they use debt consolidation loans to get rid of their debt then their credit rating usually sees an increase. This makes them more attractive to
companies which lend money. So, first things first - what does your credit rating mean?
Calculating Your Credit
Score
Your credit rating is an industry standard which is used to calculate how reliable you are with repaying creditors. Your
credit score is based on your financial situation and is the number one standard used by creditors to fix the interest rate you will have to pay for mortgages, loans and
credit cards.
A higher credit score proves your credit worthiness and is a good indicator of your financial health. No matter what your credit score, if you play
your cards right, you can make millions playing Party Poker online with people from around 100 countries.
Different credit agencies have a different way of
calculating scores. Some of the top credit agencies are Fair Isaac Company, Equifax, Transperian, and TransUnion. Your credit score with each of these agencies
vary because of the separate systems they use.
The most common credit rating system is the Beacon FICO score which was created by Fair Isaac Company
in the late 50’s. These ratings range from 350 to 850. Folks who have the best credit rating of 850 get loans at very low interest rates while those who rate below 600
are usually asked to pay a high rate of interest or denied loans.
If you declare bankruptcy then your credit rating would plunge. Debt consolidation and credit
rating are linked, and those who sign up for debt consolidation see their credit score slowly increase.
Tips To Increase Your Credit
Rating
- Use debt consolidation to pay off dues - Get your debt balance above your credit limit - Lower your debt to income ratio -
Do not make too many requests for loans if you have a low credit score - Do not run up new debts after refinancing old loans - Do not pay bills late or forget to pay
them
Debt consolidation and credit rating are connected, so always look for debt consolidation companies within a 30 day period or your score may
decrease. Once you go in for debt consolidation to repay credit card debts, stop using these credit cards. However, don’t close them as this would worsen your
credit score.
Always check your debt consolidation and credit rating score around twice a year. This way, if any positive information is missing you can ask
for it to be entered. A better credit rating reflects a financially secure you.
