Cobalt Advisors Review Really Offers Debt Relief That Will Hurt Your Credit Score

Cobalt Advisors and Credit 9 have joined Saxton Associates and Hornet Partners in flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Carina Advisors (also known as Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).

There are multiple options available for people who are struggling with debt. However, the debt resolution method that works best for you will depend on your unique situation.

Before we look at the various debt relief options available, let’s look at how debt relief programs can affect your credit score.

How debt relief impacts your credit score

Approximately 30% of your total credit score is determined by the debt you owe. Given this information, it’s possible to increase your credit score by paying off your debts on time. This is what often happens when you pay off a credit card debt that is close to its maximum limit.

Most people try to keep their debts under 30% of their maximum limit in order to avoid damaging their credit score. But it is believed that credit scores could be harmed by reducing debt as well.

Such a situation may occur if you pay back a debt and then close your account. This practice can decrease your credit age, which is believed to affect 15% of your credit score.

Credit scores are also impacted by the debt relief options you choose. The magnitude of this impact depends on the debt relief option, your credit score, and your credit needs.

Methods for debt relief and their impact on your credit score

The main methods of debt relief that are used in the present day include:

  • Debt consolidation
  • Debt snowballs and avalanches
  • Debt management plans
  • Debt settlement
  • Credit counselling
  • Bankruptcy

With the exception of credit counselling, all debt relief options have some form of impact on your credit score. This impact can be felt immediately, or could become more noticeable in the long-run.

Debtors should understand the benefits and limitations of each debt relief option and their effect of credit scores before choosing one.

Debt consolidation

Debt consolidation is widely used to pay off multiple debts with help of a large low-interest loan. This process is referred to as “consolidation” because it combines smaller debts into one large one that is more manageable.

Loan consolidation can be performed using balance transfer credit card refinancing vs debt consolidation that enable debtors to move debt from other cards for a certain fee. You can avoid paying interest on these cards by paying off the transfer balance within a certain timeframe.

This method allows debtors to lower their credit utilization by switching away from multiple balances that are close to their credit limits. This aspect of the debt relief option has no impact on your immediate credit score.

However, opening a new account could damage your credit score slightly, so debtors should think twice before using this option.

Debt snowball and avalanche

Debt snowball refers to the practice of paying off your debts one by one. The first debt usually targeted is the one with the lowest balance. The goal is to remove these debts from your credit record as soon as possible.

Debt avalanche is similar to debt snowball, but differs in the order of debt payment. In this method, the first debt targeted is usually the highest balance one. This method is slower at clearing debts from your credit history, but the debt paid back relieves a larger percentage from your total debt.

These debt relief methods improve your credit score in the long run, while having little impact in the short run.

Debt management plans

Debt management plans are typically set up with the help of counseling agencies. Under these plans, debtors are expected to make a single monthly payment to their counseling agency. This payment is then distributed among the debtor’s creditors.

When debtors agree to a debt management plan, they are required to close their existing credit cards. These closures could negatively impact the debtor’s credit score, but this effect is largely short-term.

This debt relief option has no direct effect on your credit scores, but it does have the potential to improve them in the long run, as long as the debtor is making payments on time.

Debt settlement

Some debtors can settle their debts by negotiating with their creditors. This practice can be used to lower the debt balance and close the account.

However, creditors typically allow this only for debtors who have a poor history with missed payments. Debt settlement companies are often used to negotiate with creditors on the debtor’s behalf.

This method can be risky as it involves the debtor stopping all payments to their creditor until negotiations are complete. Such a debt relief practice could severely damage the debtor’s credit score, so it is usually kept as a last resort.

Credit counselling

Credit counselling is the only debt relief option with no direct impact on credit scores. With this method, debtors seek out advice from credit counselors.

These counselors often help debtors get started with debt relief options such debt management plans. However, these services usually require a fee and have the potential to affect your credit scores. Debtors should make sure to ask counsellors how their debt relief plan could impact their credit scores before diving into one.


Declaring bankruptcy is considered a last resort option; however, it is preferable to using debt settlement. Debtors that file for bankruptcy will have their credit scores negatively impacted in the short run. The record of this impact will be visible for a full decade, so debtors may want to think twice before using this approach.

Debtors may be able to improve their credit over time after filing for bankruptcy, but will have to pay back differing amounts on their debt, which depends on the specific type of bankruptcy they filed for.

Choosing debt relief based on your credit score

Now that we have discussed all the debt relief options and how they impact credit scores, debtors should choose the option that is easiest and most effective for them.

The end goal of debt relief is to pay back all your debt, but the method you end up choosing can have an impact on your credit scores. So choose wisely and use a method which is manageable for you.