Does consolidating credit cards affect credit score

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If you have a laundry list of credit cards with high balances, debt consolidation may offer you an opportunity to combine your debts into one simple monthly payment.A debt consolidation loan is a new loan used to pay off old loans, be they auto, personal, student, or virtually any other type of loan/debt.If you already own a home and have equity, you can borrow against the equity in your home.You can also refinance your home with a cash-out refinance where the amount of the new mortgage is higher than the existing loan. You need to have money saved up for a down payment.You’ll also need money for repairs and emergencies.Since a debt consolidation loan lowers your credit score, your interest rate might be more than it would have been before consolidation.If your credit score was low before the consolidation, you may not qualify for a mortgage at all.

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If you’re concerned about the impact a debt consolidation loan will have on your credit score, you may want to consider improving your credit in other ways.You can consolidate debt and buy a home, but depending on how you consolidate the debt, it can have a negative impact on your credit score.That can make qualifying for a mortgage more challenging.In this case, you could convert your home equity into cash you can use for paying off your debt.You can also apply for an unsecured personal loan to consolidate your debt.

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