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Should your business consolidate debt to improve credit?
When you consolidate your debt you are doing so in order to rid yourself of your worst or highest interest rate accounts.The higher your interest rate is with your creditor the more money you will have to pay in order to fulfill your debt and high interest loans usually take longer to pay off when only the minimum balance is being paid.Consolidating your debt allows you to transfer some of your higher debts to a lower percentage rate so that even though you are still responsible for paying off all of your debts, the interest payments and organization of your account makes the process more manageable.
When you are better able to pay off your debts and manage the interest that you are paying on those debts, your credit score improves.Credit score is a number that is assigned to those with a financial history that indicates that person's credit worthiness.If you have a history of late payments or maintaining high balances on your credit cards your credit rating will decrease.If you are on time with your payments and have proven over the course of time that you can re-pay debts promptly and quickly, your credit score increases.Consolidating debt is an excellent way to get you on the right track to improve your credit score. A good credit score is important to both a business and an individual for the following reason; a good credit score allows you to have more and better options when it comes to asking a lender for a loan.Businesses tend to work with higher numbers than do individuals ( as in a business has more costs and earnings) so it may be especially important for a business to make sure that all resources (including debt consolidation) are utilized in order to get their credit score as high as it possible be.If a business has a poor credit score associated with it, it becomes more difficult to get a good interest rate on a loan that could be for imperative purchases such as office space or funds for a remodel. Overall the effects of consolidating debt to improve credit are mostly going to be positive if you are able to stick to your payments.But it is also important to remember that not all debt consolidation programs are created equal.Do your homework and make sure that the debt consolidation company that you decide to go with has the following traits:
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