When looking into the after effects of a debt consolidation plan you must fully understand exactly what a consolidation plan is, and what it can do for you. Using a debt solution plan for anything other then what it is meant to help with could in the end backfire because you are reaching beyond the guaranteed outcome of the plan.
What is a debt consolidation?
A consolidation agency is a company who offers its clients a program which helps in aiding multiple stacking debts which are all due at the same time every month.
The consolidation company will give its clients a loan which will pay off all previous debts on either an unsecured or secured loan. This method rids you of all your debts, and turns them all into one easy to pay off debt with easy low payments each month.
How does the process of consolidation work?
When a client of a consolidation agency is applying for consolidation the first step a customer can expect is to meet a consolidator. A consolidator is a licensed and trained representative of the consolidation company and capable of making decisions up to a specific level. With some companies the consolidator can make any executive decision meaning if you qualify, you can walk straight in and gets your loan going right away. While with other companies the consolidators must wait for some form of master approval meaning you go in and apply, make out a plan based on your income, and then it’s just a matter of waiting to get cleared through a manager, or company director.
How will consolidation affect credit scores and rating?
This depends on the client’s ability to stick with the payments towards the consolidation loan. Traditionally a consolidation company will make a payment plan with you who will work with your income and necessary lifestyle, therefore missing payments should not be a problem as long as you do not lose your current employment status.
When a client successfully pays on consolidation loans, and leans farther and farther to paying the said loan off, the clients credit will improve with each successful payment. As really as long as the plan is followed consolidation will cure credit scoring.