Montana 1st CU Blog

People who consolidate their credit card debt with a debt consolidation loan can improve their credit rating over the long term if they consistently make their payments on time within a period of two years.

First, you should know that your score may experience an initial dip when you begin the process of consolidating your debt.
If you consolidated your credit cards with a debt consolidation loan and are making regular payments on time, potential financial lenders will observe that all your credit card debt has been paid and you are managing the debt consolidation loan responsibly.

More financial lenders are willingly to extend credit to you, thus giving you an opportunity to rebuild your credit. As long as you continue to manage your credit responsibly and within your realistic financial means, your credit rating will continue to improve.
A debt consolidation loan will not improve your credit rating over the short term as it takes a minimum of two years of consistently paying back the debt consolidation loan before you will begin to see increases in your credit rating. It takes commitment and time to rebuild your credit rating. Now that your credit cards are paid in full with the debt consolidation loan, keep your credit card charges to a minimum, paid in full, and on time. This will reflect positively on your credit rating as well.