Having many EMIs in a month can affect your monthly outlays in a massive way.
It is because along with higher EMI amounts, you also need to manage bigger interest charges.
And it is where availing the debt consolidation loan can come to your rescue.
A debt consolidation loan helps you merge your entire debts into one and pay just a single EMI per month. In turn, you can save big and smoothly manage other expenses in your life.
If you are also confused and want to know the clear picture, then this quick article can help you. Read on!
Can a debt consolidation loan application hamper your credit report?
Yes, it is true that when you consolidate your ongoing debts, then your credit score does take a beating! It goes down a bit temporality. Why? It is because the application for the consolidation triggers a hard enquiry on your credit report.
But it is only a short-term decrease! Once you avail the debt consolidation loan, then you can significantly improve your cibil score. Yes, it is possible if you manage to pay EMIs on time.
Your repayment history handles constituting up to 35% of your credit score. And if you miss making payments, then it may dent the score. You are availing a debt consolidation loan to pay off your debt and pay just 1 EMI.
It also means that your future payments will be steady as you will only need to manage a small EMI amount.
Hence, if you look at the bigger picture, then a debt consolidation loan can improve your credit score. It is of course after you always make timely payments over the loan tenor.
