Do Debt Consolidation Loans Ruin Credit Score?

Debt consolidation loans do have the SHORT term potential to ruin your credit. But, they have the term potential to HEAL YOUR CREDIT beyond belief. There is a positive and negative side to debt consolidation loans. If you're in dire financial straits, and you're a long term thinker--or trying to start being one--then these loans are ideal for you. If you just want an immediate fix to your problems, and are not considering this type of financial movement to improve your credit down the line then, this might not be the best choice for you.

When you first get a loan like this, it will show poorly on your credit score. But, you must remember, your credit score is already pretty low to begin with. That's why you're seeking help. Immediately after you get the loan, you probably won't be able to get any credit that is unsecured. And you probably shouldn't be getting into new debt at that point anyway.

After about a year, you will start to receive offers for unsecured credit cards. The limits will be low, but creditors will be interested in loaning to you again. Now during the first year you should get secured credit cards, and participate in credit building programs like catalogs, and things like that. The second year you can take advantage of some of the unsecured credit you're offered, but don't start shopping on that credit. You're only utilizing it to rebuild credit. Don't think of it as money. Think of it as what it is, credit.

Use it to build your life back up to the point that you'd like it to be. Never borrow more than you can afford to pay back ever. Only go shopping on real money you have in the bank to spend.

Take the two years you have bad credit and use them to build perfect credit. And, after about two or three years, you will have perfect credit. You will be able to do anything. But, you should still be careful to keep your credit in good standing from now on.

You can use your new perfect credit to get a business loan, and use that money to make more money instead of using it to create debt. Or, you can use it to buy property. Simply remember to think long term.