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Two Red Shoes Copyright © 2020 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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Reader question on consolidating and credit scores


A reader question:

A question about debt consolidation. I want to consolidate my debts as I know that it would help me to lower the monthly payments and interest.

Recently, I read that it would affect one's credit score. Does anyone know more about this? I have a good credit score and never failed to make any payments till now. Right now I feel its very hard to make my repayments on time. That's why I am thinking of consolidating into one single payment which is much less than the sum of the existing payments - but, not if it would affect my credit score!

My response:

NOT making your repayments on time has a bigger effect on credit score than consolidating. I think we’re confusing internal lender credit score and personal credit report scoring. Internal lender credit score looks unfavourably on consolidating – that’s true, but it doesn't go back to your credit report. What impacts your credit report score is late / missed payments and too many enquiries. If your personal credit report score is good then there’s no reason for this to be dramatically changed.

Now, the caveat I have on any debt consolidation is on this article - but bottom line doing something sooner is better than doing nothing and damaging your credit worthiness.

#FAQ #askbec #expertadvice #consolidation #debtconsolidation #mortgagebrokerPenrith