Sub-Prime Home Equity Line of Credit Debt Consolidation

The consolidation loan you are considering should have little effect, positive or negative, on your current FICO score, if you manage the consolidation properly. Since you are not creating new debt, only transferring it from one account to another, you are not increasing your total amount of debt. Consolidating your debts will leave you with several accounts with available balances, which could push down your score, as it may leave you with too much available credit. To mitigate this problem, and to reduce the temptation to charge on the recently paid-off credit cards, I encourage you to close all but a few of your consolidated accounts. You should keep three or four of your oldest and most favorable accounts open, so they continue reporting a lengthy positive payment history, which is very beneficial to your credit score.

The fact your home equity line will be sub-prime should have little or no immediate effect on your FICO score. The terms of a loan, such as interest rate and fees, do not appear on your credit report, so the fact that your loan is sub-prime should not be a factor when your FICO score is calculated. The key question when considering a sub-prime consolidation loan should not be how it will affect your credit score, but rather its ability to actually improve your financial situation. The interest rates of sub-prime home equity lines are often almost as high, or higher, than many credit cards. Before deciding that a HELOC consolidation loan is right for you, carefully consider the interest rates on the cards to be paid, and compare them with the rate and fees associated with the HELOC to make sure you will actually be saving money.

To find out more about home equity, I encourage you to visit the Bills.com Home Equity Resources page.

In addition, you should review the Debt Consolidation page to read more about consolidation loans. I hope the information I have provided will help you Find. Learn. Save.