Is this BAD for credit??

dario, i have heard going through a service is bad because it shows that you cant handle credit and you need someone else's help. although moving balances onto one card is not bad from what i have heard. thats my 2 cents.
thad

 

i dont think so, i would think a balance transfer would just come up as a charge to one account and a payment to another

 

It is bad, bad, bad. My in-laws did that and now their credit is *screwed.* You name it, they've been rejected for it. In fact, they just had a mortgage kicked back about a week before closing and it was because of that. (Or so they say.)

I'm not sure how long it stays on your report but my understanding is that as long as you are under credit counseling or whatever they call it, you have *0* chance of even getting a library card.

I would never do it.

 

I have an employee who had a serious credit problem. He owed approcimately 2 years of his GROSS SALARY in credit card debt, most of it at 19%+

He got credit help, and three years later, is finally seeing some light at the end of the tunnel. They showed him how to renegotiate his credit rates, without him signing up to have them do it for him.

So, he's straightening it out with their help, without going on record as having his debt taken care of by the counseling service. That would seem to me to be a great alternative to just handing your problem over to them, having them do the negotiations, and then sending a lump payment ot them each month that they distribute to the creditors, which is bound to show up on your credit report.

I don't know about balance transfers. How can it be harmful if you close one account, and open a new one at a lower rate?

According to Equifax, your FICO score can be affected by having a lot of recently opened accounts, or accounts that are near their limits, or accounts where you consistenly make late payments.

Spend some time on the Equifax site to get familiar with what affects credit ratings. It's prettyt amazing what they look at. Oh, and your auto insurance company looks at it too. People who pay their bills on time are considered a lower driving risk, and often get better rates.

 

The only time it is prudent to rob Peter to Pay Paul is if you take an equity line to pay of debt while at the same time, you cut your credit cards up. A re-fi to pay debt is good in the sense that it usually lowers your income to debt ratio, but banks are taking a harder look at these loans because MOST people just run up their debt in 2-3 years!

 

Agreed. Those counseling services that negotiate for you are HORRIBLE for your credit. Been there done that, was screwed for three years. Credit counseling appears on your credit report until the account is paid in full. Transferring to a lower interest card or the home eq route is a much better idea.