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Though debt consolidation may mean taking on a new loan, it could eventually help a credit score
By Edith Barlow on Feb 18th, 2010
With the credit situation being what it is, many consumers are working toward trying to improve their credit score in order to remain eligible for the best loan terms.
However, a recent report from Seattle news station KOMO notes that some of the things people do to try and stay away from debt may also end up reducing their credit score.
For example, people who charge a lot of things on their credit cards can hurt their credit score even if they pay off debt completely. Such a high amount of debt at a given time can reflect poorly on a credit report.
"Remember, 30 percent of your score is based on the total amount of debt you owe," the station said.
Other things that could end up affecting a person's credit score include not using a credit card debt account for a time, the station noted. Other experts have said that not using account could lead to it being closed, which could reduce a credit score.
In dealing with credit card debt, one option people may consider is a debt consolidation loan. Though taking on new debt in may lower a credit score a bit in the short term, it could also help by allowing people to pay off outstanding debts, which can eventually help a score.
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