Before getting a debt consolidation loan, you are advised to research thoroughly and to go through online reviews to determine your most suitable debt consolidation companies. It is also expected that you calculate the cost of the consolidation program to determine the most affordable option. At the same time, you credit rating should be accurate and your income and living condition stable. With these in order, the chances of getting the loan approved are high. However, what you do after getting that debt consolidation loan is more important. Your road to debt and financial freedom depends on what you do after. Setting a budget and never missing payments are two important after-actions. However, you should beware of habits and acts that could ruin your credit rating and score. Don’t do the following things after debt consolidation:
Do not miss your payments
Online debt consolidation reviews reveal that even the most reputable debt consolidation companies report non-payments to the relevant credit bureaus. Miss a payment at your own peril, as this information will be relayed to the bureaus tanking your credit score further. Note that being classified as a high-risk borrower is the worst tag you can have when rebuilding your finances.
Do not close off your credit card accounts at once
The temptation to run things on a clean slate is high after debt consolidation. Closing up all your credit card accounts will seem like the right thing to do, but it isn’t. By decreasing the number of credit card accounts, you decrease the amount of credit on your name. Your credit utilization rate is used to assess your credit score and with closed credit card accounts, the score readings will be lower. Closed credit card accounts also thin your credit history since these won’t be reflected on the active accounts. This lowers your credit score too. Therefore, rather than closing accounts after getting your debt consolidation loan, you should physically cut up your credit cards to avoid temptations, close a few accounts strategically, or ask your credit card company to increase your credit line – if you have a strong willpower.
Do not rack up more debt
Starting over with a clean slate is an amazing thing. Waking up with no zero creditor loans is satisfying. However, despite how good and clean your debt account looks, with only one debt to repay, you must remember that you still have all the previous debt on your back. The only change is the location. Rather than scattered accounts, you have one account to manage. After getting that debt consolidation loan, do not rack up more debt to fill the created void. Practice a cash-only shopping diet where you only spend what you have and wait until the next payday to spend on that which you do not need.
To prevent racking up any more debt, adjust your spending habits. Shop-a-holism is probably the cause of your high debts. Cut down unnecessary costs, save where you can, and if possible, get a second job. If you wish to take control of your financial situation after approval of the debt consolidation loan, you must not do the above three things. Steer clear of these pitfalls to a debt free life sooner.