Too Much Debt

One of the leading causes of a poor credit score is having too many debts. Lenders see this as a bigger risk because they understand that paying many accounts is a lot more difficult than paying one or two even if the total amount of the borrowings remains the same.

It will certainly make your budgeting and financial management easier by only having a few debts to remember.

One of the benefits of debt consolidation is often a reduction in the repayments due to getting all your loans under a lower interest rate.

If you own your own property then mortgage rates will usually be lower than the interest rates you will be paying on personal loans and hire purchase agreements.

With the extra savings you will be getting from the lower interest rates the money can be applied to the outstanding debt and debt reduction will be faster.

This in turn will boost your credit score and that will help you to get any further loans at better rates should you need them.

With lower monthly repayments your risk factor will be reduced and this will be reflected in a better credit score.

Even minor savings in interest rates will make the repayments over the course of a year or so a lot more manageable and if you use the savings to pay off debt you will be fast tracking your debt reduction and improving your credit score faster.

Most people with more than one debt will have some of their debt at higher interest rates so it is uncommon for savings not to be achieved when consolidating debt and this is one of the first areas that financial managers will look at when they are preparing a budget and management plan to get someone back on track financially.