Does consolidated credit affect your credit?

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Consolidating credit in Canada can initially dip your credit score by about 5-10 points due to a hard credit check. This new loan helps your credit utilization but may age your accounts unfavorably. Avoid closing old accounts to maintain history and prioritize timely payments to boost your score over time. Reach out via phone, text, or live chat if you have any questions.

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Consolidated Credit Affect Your Credit Question

Does consolidated credit affect your credit? I recently merged some of my credit accounts

From: Anonymous Question
Location: Nanaimo, British Columbia (BC)
Category: debt consolidation

Consolidated Credit Affect Your Credit Answer

Yes, in Canada, consolidated credit can shake up your credit score a bit. When you kick things off with a consolidation loan, you might see a slight dip—around 5-10 points—because of a hard credit check. It’s like stepping back a little before you leap forward. This new loan can be a hero for your credit utilization by trimming down those revolving credit balances, but it might make the age of your credit accounts look young, which can be a bummer for your score in the beginning.

And here’s a quirky twist: if you decide to shut down your old accounts after consolidating, it’s like waving goodbye to a chunk of your available credit and that comfy credit history—both key players in your score game.

But fear not—stick to a steady rhythm of on-time payments on that consolidation loan, and you’ll see a positive swing because payment history is, well, a big deal in your score mix. If you keep those old accounts hanging around, your credit history keeps some length, and hey, having a mix of credit types (like that new consolidation loan) can add a pinch of something nice to your score.

Bottom line? Keep an eagle eye on your accounts and steer clear of missed payments to boost your credit score post-“debt consolidation”.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

Consolidated credit can affect your credit score depending on how you manage the newly merged accounts. While merging accounts may simplify payments, if it leads to higher credit utilization or missed payments, it can negatively impact your credit score. There is no specific directive within the cited acts or regulations that addresses the effect of consolidated credit directly; however, credit management principles dictate the importance of payment history and credit utilization on one’s credit score.

From: OSB Helper

Related Questions to Consolidated Credit Affecting Your Credit

Here are the top 5 most frequently asked questions related to the impact of debt consolidation on credit, based on current trends and concerns:

1. Does debt consolidation hurt your credit score?

• Yes, it can both positively and negatively affect your credit score.

2. How does applying for a debt consolidation loan affect your credit?

• It can result in a temporary drop in your credit score due to the hard credit inquiry.

3. Can debt consolidation improve your credit utilization ratio?

• Yes, it can improve your credit utilization ratio by reducing the amount of revolving credit used.

4. How does closing old accounts during debt consolidation impact your credit score?

• It can negatively impact your credit score by reducing available credit and shortening your credit history.

5. Can making regular payments on a debt consolidation loan improve your credit score?

• Yes, consistent on-time payments can positively impact your credit score over time.

These questions reflect common concerns and are aligned with the information provided in the sources regarding the impact of debt consolidation on credit scores in Canada.

If you have a question about debt see our debt questions or ask your own debt related question.

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