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Consolidating loans means making your loan management easier by paying your loans as though it was one debt. Ideally, consolidation makes your financial budgeting easier since you have only one lender or creditor to worry about. However, there is no debt repayment plan that doesn’t come with risks. Without any doubt, consolidating your loans can significantly lower your monthly payments, but it can also come with a drop in your credit score. But how is this possible when you have lower monthly payments?

Well, there are two ways you can consolidate your loans and they include a balance transfer card and obtaining a debt consolidation loan. No matter the choice of the strategy you choose to consolidate, the lenders will perform a hard inquiry on your credit, which can reduce your credit score albeit by a few points. However, if you are clear about changing the spending habits that caused you to remain behind schedule, and avoid piling on more credit, the overall result is that Debt Consolidation NZ Bad Credit has all positive effects on your credit ratings.