So, you have decided to reduce your debt by doing it yourself? Today, we will discuss a scenario where you have multiple creditors and you want to consolidate it in order to pay it all off.
A consolidation loan can be a good idea if you have many different creditors. It allows you to re-focus all your efforts into one place, potentially allowing you to pay your debt off quicker with less effort on your part.
Consolidation loans are good for those who are busy and have trouble with their credit reports due to disorganization. They are not always the best way to pay off debt, but they do have some advantages. One advantage is for budgeting, as you will only have one payment to make. Another one is interest rates, as often the new loan will have a lower rate than most of your other credit accounts.
When you go shopping for a consolidation loan, it is critical to find one that actually helps you pay off your debt quicker. In order to do this, you need a loan that will cover all your credit in one shot and will have a lower interest rate than most of your other accounts.
Some good ideas for consolidation loans are:
1. Home equity loans – this is usually the best option if you own a home, as the interest rate is often the lowest you can find. Be careful though, because if you borrow against your home and can’t pay it back… you could end up in foreclosure and lose your house.
2. Your local bank or credit union – your bank knows you and your history. They would be more likely to loan you money given your background with them.
3. Another credit card – if your debt amount isn’t too high, you can often transfer all the balances to one credit card. Many companies now offer very low transfer balance interest in order to snag a new customer.
A final note… the greatest risk with a consolidation loan is that you pay off all your current accounts, but then start using them again. Don’t do a consolidation loan if you think you might be tempted to start adding to your credit problems. Ideally, once you paid off those accounts with the loan, you would close them to prevent further damage.
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*Do It Your Self Credit Repair