Frequently Asked Questions

Frequently Asked Questions about debt free solutions.

Does consolidating affect your credit rating?

Consolidation does affect your credit rating, but whether positively or adversely again depends on your situation. Taking out a consolidation loan as you consolidate your unsecured loans into a secured loan could lower your score temporarily. On the other hand, consolidating your debts and making good on your payments will gradually raise your credit rating. Of course, if you consolidate and then lapse in your payments to your debt consolidation company, that will lower your score.

Does consolidating reduce your debt?

One of the more widely reported myths about debt consolidation is that by consolidating, you are reducing your debt. The amount you owe does not decrease. Securing a lower interest rate could prevent your total amount owed from increasing like it would had you kept all your credit and loan accounts separate; however, should you choose an alternate repayment plan that extends the life of your loan and lowers your monthly payments, you will pay more interest over time, thereby effectively increasing your total amount owed in the long run. You are not eliminating previous loans. You are simply lumping them together in order to pay one sum each month to one company who then disperses your money in proper amounts to the proper creditors and lenders.

How do I avoid a debt consolidation scam?

One way to insure you work with a reputable company is to fill out our free form and get quotes from our partners. In general, be wary of companies who are evasive about their services or their fees. Watch for companies who promise a debt free solution that includes reducing your overall debt. Check with the Better Business Bureau, and see that the company clearly spells out what they do and what they charge for it.