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Can zero balance on credit card affect my credit rating?

Posted on: 17th Mar, 2007 03:57 am
My credit rating is possibly better than the average because I pay all credit card bills at the right time. But I am looking forward to consolidate all the debts for a low interest rate just to pay them all faster. Would it be a good thing to pay off all the balances individually or should I consolidate? can zero credit balances affect my credit rating?
"can zero credit balances affect my credit rating?"
Maintaining some balance on your old cards is useful instead of paying them off.

g. turner
Posted on: 17th Mar, 2007 11:14 am
"But I am looking forward to consolidate all the debts for a low interest rate just to pay them all faster. Would it be a good thing to pay off all the balances individually or should I consolidate?"
Consolidating the debts will be really helpful and a lower interest rate will help you come out of debt a lot faster. I had once gone through one such program and it really helps.
Posted on: 17th Mar, 2007 01:16 pm
Hi Abiel,

Consolidating debts is a good way to get debt-free as it gives you the chance to manage only one loan instead of a number of debts. You will feel comfortable when you make payments on a single loan instead of two or more loans.

I think consolidating debt is better than paying off the balances individually. In any case, if you are paying down the debt, your credit rating will not be affected negatively.

Thanks,

Sara
Posted on: 19th Mar, 2007 04:03 am
Hi Abiel,

Debt consolidation programs (without taking a new loan) by which the debt consolidation company negotiates with the creditors to provide the debtor with a low rate can affect credit rating. Credit counseling which is again very similar to debt consolidation programs may also affect credit rating of the debtor.

The primary reason behind such a drop down in the credit rating is because in both debt consolidation and credit counseling, some of the debtor's accounts are closed simultaneously. This reduces the available balance of the debtor and hence his credit score (and rating) falls.

In your situation, if you consolidate debts, it may affect your credit rating but then you'll get debt free faster. On the other hand, paying off individual creditor will not affect your rating but then it may be a difficult task for you.

It is up to you to decide upon the two options - whether you need to get debt-free faster or you need to keep your score and rating intact.

Thanks,

Caron.
Posted on: 19th Mar, 2007 04:24 am
Hi Abiel,

I would just like to mention here that zero balances (no available credit limit) on all accounts can affect the credit score of a debtor. But zero balance on some of the cards will not affect you to that extent. This is because there will be at least some amount of credit available on the other accounts.

Thanks.
Posted on: 19th Mar, 2007 04:57 am
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