Beware of Saxton Associates debt consolidation junk mail offering unique reservation codes for low interest personal loans.
Best 2020 Reviews also covers Credit 9 a/ka/ Americor Funding, another aggressive direct mailer offering unique reservation codes for low interest loans for cash strapped consumers.
Saxton Associates, a/k/a Hornet Partners, Polk Partners, and Corey Advisors, Jayhawk Advisors have recently been flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers.
Best 2020 Reviews, the personal finance review site, has been following Saxton Associates, Hornet Partners, Polk Partners, Ladder Advisors, Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc., for some time now.
Depending on the kind of debt consolidation loan that you choose, it can either improve or hurt your credit score. It largely depends on how good you are with your repayments.
Debt consolidation loans are meant to streamline loan repayments. They are particularly helpful for borrowers who are struggling with large debt and accumulating interest expenses because of that.
Debt consolidation loans can provide advantages like simpler payments and lower interest expenses that can help such people to pay off debt. While these loans can help to improve your credit score, provided that you pay on time, they are used primarily as tools for relieving the burden of debt. In other words, their main purpose is to eliminate debt. An improved credit score is an added advantage, but keep in mind, it can go the other way if you are not timely with your repayments.
Will a Debt Consolidation Loan Reduce My Credit Score?
It depends on the kind of debt consolidation process that you have started. There are different kinds of debt consolidation loans and some of them have the potential of harming your credit score in various ways.
If you are working with a credit counselor, then it is imperative that you fully understand the plan and how it can backfire if you fail to pay on time. You must go over the agreement that you signed with your credit counselor and pay close attention to all details. The kind of credit counselor that you are working with also matters. It is best to work with a not-for-profit credit counseling service if you want to minimize the loan’s potential negative impact on your credit score.
Debt Management Plans
The best credit counseling services are from nonprofit organizations. If you are having problems with debt payments, then you can approach a credit counseling service to get financial advice. The organization will help you with budgeting and debt management. Your credit counselor can give you advice on how to manage your finances in better ways.
If you opt for a debt management plan, then it will not show in your credit history. However, it will have an impact on your credit score in an indirect way. As part of the debt management plan, you may have to close down certain accounts. The consequence will be an increase in the credit utilization ratio. This will have a negative impact on your credit score.
However, you can offset this effect by making timely payments for your debt consolidation loan. If you pay your credit counseling organization on time, then it will make timely payments to your creditors on your behalf. Payment history is a key factor behind your credit score. Paying on time can account for 35% of your credit score. Hence, it is important that you do not make any late payments; otherwise, it will have a negative impact on your credit history and score.
Debt Consolidation Loan
The types of debt consolidation loans that are available to you depend on your credit score. If you have a poor credit score, then it may be difficult for you to get the kind of debt consolidation loan that is suitable for your situation.
On the other hand, if you have a good credit score, then you will have greater opportunities for getting the right debt consolidation loan. A good credit score may make it easier for you to get a lower interest on your debt consolidation loan. One of the key purposes of a debt consolidation loan is to provide a low interest rate. The interest rates on credit cards are usually very high because of which paying back debt is difficult. Debt will keep accumulating with the passage of time as a result of high interest rates, which can further exacerbate your debt payment problems. A debt consolidation loan can ease the burden of debt payments, thanks to a reduced interest rate. Low interest rates may be possible only with good credit scores.
Prior to applying for a debt consolidation loan, you should be aware of your credit score. This will help you to select the best debt consolidation loan for yourself. You will also avoid several hard credit inquiries in a short time period.
Can a Debt Consolidation Loan Improve My Credit Score?
The primary purpose of a debt consolidation loan is to help eliminate your debt. However, if done right, it can also help you to improve your credit score. If you are diligent with your repayments, then a debt consolidation loan can help improve your credit score.
A debt consolidation loan can provide you with advantages like simplified payments. Instead of paying multiple creditors, you just need to make one payment each month. A debt consolidation loan can also help you to save a lot of money on interest expenses.
It is important to understand how the credit utilization ratio works for your credit score. Your credit utilization ratio is the percentage of your credit limit that you are using. This number is very important since it accounts for a substantial part of your credit score. 30% of your credit score depends on your credit utilization ratio.
Here is how the credit utilization ratio is calculated. Suppose the limit on your credit card is $10,000. If you have paid $5,000 with your credit card, then your credit utilization ratio will be 50%. For a good impact on your credit score, your credit utilization ratio should be less than 30%. With a debt consolidation loan, you can possibly keep your credit balances low. This will lower the credit utilization ratio and subsequently improve your credit score over time.
To understand the kind of debt consolidation loan that will work best for you, you must understand the kind of debt that you have to repay. If you have medical debt, then a debt consolidation loan may not be a good idea since these liabilities often carry little or no interest rate. But if you have credit card debt, then a debt consolidation loan may be a good option since credit cards carry high interest rates.