In the U.S., creditworthiness controls a consumer’s access to new lines of credit. It also indicates if a consumer has a history of delinquent debts and is a risk to the creditor. Debt consolidation offers a solution to bad credit. A local debt consolidation consultant explains how consolidation improves a consumer’s creditworthiness.
Decrease Income to Debt Ratio
Lenders review the consumer’s income-to-debt ratio when establishing creditworthiness. Federal laws require the assessment to prevent predatory lending practices. A debt consolidation loan helps consumers pay off debts immediately. The income-to-debt ratio achieves a more suitable rate after the debts are paid off.
Bring Accounts Up to Date
Creditworthiness is affected by late payments. In fact, the frequency of late payments appears next to the account on the consumer’s credit history. Debt consolidation helps consumers pay off the debts entirely. The creditor updates the account listing after the full payment is received. The account is listed as closed on the credit history, and payment history is no longer available.
Eliminating Negative Credit History Listings
Negative listings such as charged-off credit card accounts hinder creditworthiness. Creditors deny new lines of credit if consumers have negative listings. The severely delinquent accounts present the consumer as a risk to the creditor. The listings prevent the consumers from getting approval for a new loan or mortgage. A debt consolidation loan pays off the charged-off accounts all at once. Negative listings are removed upon request.
Immediate Increase in Credit Scores
The fastest strategy for improving credit scores is paying off high volumes of debt. A debt consolidation loan combines all debts into one account. All debts included in the contract are paid off after the consumer accepts the contract. The consumer’s credit scores on all three bureaus are updated immediately.
In the U.S., creditworthiness cuts off access to mortgages and personal financing opportunities. High volumes of debt present consumers as a serious risk to lenders. Unfortunately, excessive debts take years to pay off and decrease a consumer’s creditworthiness. A debt consolidation loan remedies the situations in minutes. Further details about the debt consolidation loans are more found here today.