In turn you would pay off the lump sum likely at a much lower rate than say what your credit card company is offering.
In turn, however, your home could be on the line if you default.
The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.
The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the chance to begin adding to your credit card balances again.
A credit score is derived from items reported in your credit file.
It uses a complex mathematical algorithm to come up with a score that predicts whether you are more or less likely to default on your next loan.
Banks typically only want to lend to people with high credit score.
Your best bet is to go with an alternative lender, especially if your credit is already less than great.When trying to deal with debt, consolidating your credit cards and low interest loans can help you save a lot of time and money.Debt consolidation is a great way to get out of debt and more often than not it can help save you from financial ruin. And how do I go about consolidating my debt so that it won’t negatively affect my credit rating?Another type of debt consolidation is one you would get through your mortgage lender – a HELOC or home equity line of credit.This essentially allows you to borrow money to pay off your debts using your home as collateral.The cliche about rearranging the deck chairs on the Titanic came to mind when I read your question.