About 30% of Americans have problems with the state of their credit. If you are one of those people, then you are probably interested in improving your credit and facilitate repayment of all your debts. If it is so then you should know how to consolidate debt into one.
To get rid of debt, you can declare yourself bankrupt, but it will damage your credit hard for many years. You will not be able to get financial support from lenders. But none of us is immune from cases where we may need such support.
Therefore, in this article we suggest that you consider other solutions of how to consolidate debt. Although you will not get rid of debts immediately, but you will greatly facilitate their payment, and highly increase your credit score over time.
We are talking about how to consolidate debt into One. This method will reduce the pressure of debt on you and reduce the likelihood of missing at least one payment on your loans. After all, remembering one payment is much easier than many that come on different days of the month. Of course, this method may not be available to all debtors, depending on your financial situation, your possibilities and the state of the credit score. Therefore, it is worth to understand this.
Calculate the total amount of your debts
To understand whether you have the ability to pay all your debts in the event of their union, you must understand how much you have to pay. Before you decide exactly how to consolidate debt you can make a list of your debts and calculate their total amount.
If you have overdue debts, then ask if they were written off by the lender and delivered to the collection company. In this case, there is a possibility that you can negotiate with the company for cut the amount to pay off. Now that you know the real amount of your debt, you can figure out whether your income is enough to pay it, after you have paid all your monthly living expenses.
Find out about your credit rating
The lower your credit rating, the more risky borrower you will be considered, because the credit rating of each of us helps lenders see the risks of lending specific borrower. High-risk borrowers get more denials of loaning, but if be approved, creditors will take higher interest and less favorable terms.
You can find out about the status of your credit by receiving a credit report in one of the US credit bureaus. These companies collect information about credit behavior of all borrowers. These bureaus are Experian, Equifax, TransUnion and FICO. Once a year it is free for you to get your reports from them.
Is Consolidate Debts into One right for you?
To determine this, let’s look at some of the features of debt consolidation. First, as mentioned above, answer on the question how to consolidate debt allows you to manage your regular payments easily. By combining several debts with different terms, you will get common one debt with a single interest rate and the same terms.
Simple conditions and one payment will not allow you to get confused in the dates of payments and skip or forget about one of them. So you will make every payment in a timely manner, which will constantly improve the condition of loan for you.
If you have a bad credit, then you mostly will not be able to rely on ordinary bank loan, so it is worth to consider the variants of how to consolidate debt, that available for low credit score.
Unsecured personal loans
Personal loans for bad credit that are unsecured need more searching, but who seeks will always find. Such loans do not require any collateral, so they are not often available to borrowers with bad credit. However, if the lender risks contacting a bad credit, then you may be sure that the interest rate will be very high due to the risk.
Home equity loan
Every borrower can use his home if has to get a loan to how to consolidate debt. This may be the best option for those with a low credit rating. Lenders are willing to take risks with such borrowers through noticeably raising the interest rate. This will increase the duration of your mortgage, as well as the amount of the monthly payment, but at the same time, it can be a good way out for you if your credit is bad when you are seeking ways how to consolidate debt.
A good option when you think about how to consolidate debt can be a balance transfer from one credit card to another. This will make sense when the interest rate on one of the credit cards is noticeably lower in order to carry out such a transfer, since it will cost about 3% of the transfer amount.
Of course, this must be approved by the provider of the credit card to which you would like to transfer the balance. If approved, you will receive a preferential interest rate for a period from one to two years. This will be one of the best options of how to consolidate debt.
You can use your retirement account to take a loan if you have a bad credit, but you should remember that this is your financial security for old age when it will be difficult for you to earn your living.
These funds are worth the risk only when there are no other options, because in case of failure you can be left without your pension. Also, if you do not repay the loan before the tax time, you can be fined.
The best option for bad credit
Question about how to consolidate debt became very actual last years in face to many Americans. To facilitate repayment by Consolidate Debts into One, you may apply for a loan to various financial companies. Such a loan can provide you with credit unions, banks, online lenders and others.
In any case, with the help of debt consolidation you can reduce the debt burden on your budget, reduce the interest that you have to pay, and also simplify the management of your finances.