Many people with high credit card balances think a credit card debt consolidation company will damage their credit rating. The plain and simple answer is no, they cannot hurt your credit rating. If your credit card balances are maxed out and you are having difficulty making your monthly payments, Your credit rating will soon be damaged if it is not already.
Failure to act on your debt payment problems is the worst way to damage your credit rating. Since credit card accounts are unsecured lines of credit, the interest rates are higher than secured loans such as car and home loans. Credit card companies make their profits in several ways.
Unless the credit cards holder pays their balance in full every month and never takes a cash advance, the card holder is charged interest on their purchase balance and a higher finance charge on the advance. If you go over the credit limit, make a late payment or bounce a check, the card companies charge you fees and penalties for this. If you do not pay these fees off right away, interest is charged on them until they are paid. Needless to say, if you have a financial hardship such as a job loss or reduction in your paycheck, these credit card balances will only compound the hardship.
Debt relief agencies are godsends for cardholders with repayment problems. As I demonstrated above, once a card balance becomes unmanageable, your debts will actually snowball to the point of an avalanche. These relief agencies negotiate with your debtors to work out a repayment plan. They usually get the creditors to waive some of the fees and stop future interest and penalties from driving up the balance higher and higher. The debtor makes 1 monthly payment to the agency, the agency disburses the payments to the creditors as agreed. The creditor gets their debt under control and actually improves their credit with every payment they make.