The Biggest Debt Consolidation Misconception

Unfortunately, far too many people get involved with a debt consolidation program and think their debt problems are instantly wiped away. Of course, that's not the case. You still must make payments – and make them on time.

Sure, creditors will see you have some past payment problems, but they'll also notice that you're taking care of your financial obligations. Effort goes a long way when it comes to paying – and not ignoring – your credit card debt.

How Fast Will Your Credit Score Rise?

Before you see an increase in your credit score, you need to demonstrate a positive payment history. One or two on-time payments will help, but it's likely you won't see a dramatic increase immediately.

Just like paying off your debt takes time, so does increasing your credit score. Debt consolidation will only bring financial relief if you dedicate yourself to changing your payment (and spending) patters.

Need some quick do-it-yourself tips for improving your credit score?

Debt Consolidation vs. Bankruptcy

Bankruptcy is a more serious situation than debt consolidation. By filing for bankruptcy, you're legally declaring an inability to pay your creditors. For this reason, bankruptcy has a more damaging effect on your credit report.

Debt consolidation is simply a way to manage multiple balances using one loan paid at a lower interest rate. The advantage of this type of program is that it can help you get your accounts back on track.

0% Balance Transfers Can Be Risky

If you're considering debt transfers from multiple accounts on to one credit card with a 0% interest rate, do your research before making this decision. Offers such as these might seem enticing, but the interest rate is often only for an introductory period. After a short amount of time, the interest rate shoots up significantly.

You can find out much more about credit card misconceptions here.

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