Without question, personal debt is something that plagues a number of people each and every year. As a matter of fact, the average household in the United States has approximately $133,000 in debt. Most of this debt comes from credit card accounts. That is the kind of thing that makes you feel like you are never able to break even and that you are not really working for yourself. Bad habits can make debt spiral out of control very quickly, as can unfortunate incidents such as unforeseen medical bills. No matter what kind of debt you have, you need to be sure that you attack it head on so that you are able to make your debt issues a thing of the past. It is very important to make this a priority, so that you can have financial prosperity for many years.
That is partially where debt consolidation loans come into play. Many people seek debt consolidation loans in order to make sure that they get their finances in order by attacking their debt. There are many companies that specialize in these loans and they can provide you with the help that you need in order to move forward. Read these tips below to learn more about debt consolidation loans and how they can serve you, even if you have bad credit.
#1: Learn what a debt consolidation loan is
As previously mentioned, it is very common for households to have accumulated six figures worth of personal debt. This can be hard to keep track of, as many people have a number of accounts open that they need to settle. A debt consolidation loan does away with this, because it involves paying off your creditors so that you are able to transfer the debt over to a single account. A debt consolidation loan company will take over all of these accounts and issue you a single bill that you pay to them.
#2: Understand the benefits of getting a debt consolidation loan
There are numerous advantages that come with taking on a debt consolidation loan. First and foremost, it makes things easier in terms of keeping up with your debt and reducing it. The logistical matters of paying off numerous debts alone can be enough to discourage a person from staying on top of their finances and paying these numerous accounts in a timely manner. As a result, you can expect to be able to breathe a sigh of relief and reduce some of your stress levels as it pertains to paying off your debts. It’s also possible to get a better interest rate that allows you to pay back the loan on your terms and at rates that you can afford.
#3: What should you do before applying for a debt consolidation loan?
Once you know that you are ready to take on a debt consolidation loan, the first thing you should do is know exactly which data accounts are open and how much money you owe in total. The quickest and most accurate way to do this is to reach out to a credit score company that can pull your report. By pulling your credit report, you will be able to quickly see every single credit account that you have open and how much money you owe. This might be a good time to start pulling your old tax returns as well in order to get a clear picture of how much income you are bringing in on a regular basis. This will put you in a good position with your best foot forward when applying for one of these loans. These are the variables that will come into play when a loan officer is making a decision on whether or not they will accept your application and what sorts of interest rates you will expect to receive should you be approved.
#4: What credit score range is ideal for the best rates on a debt consolidation loan?
Credit score is a very important factor that you should understand as it pertains to seeking a debt consolidation loan. Poor to fair credit scores hover around the 450 range and below, while moderate credit scores reach the 500 and 600s. Typically, 700 and up is considered to be a good to excellent credit score, so having a higher credit score gives your application credibility and makes it much easier for you to expect to receive approval. By knowing that you are in the clear as far as understanding your credit score, you will have the peace of mind that will make you feel confident in applying for a debt consolidation loan.
#5: How can I find the help of a debt consolidation loan company?
The first place you should look for is referrals from people who have gotten debt consolidation loans before. Find a very reputable company that provides these loans and they have gotten excellent reviews in the process. You can check with toptenreviews.com to see their list of debt consolidation loan companies that are considered among the best available. Once you have figured out which companies are the best of the best, you will want to begin doing your background research, checking with organizations like the Better Business Bureau. By checking with the Bureau, you will get to see a grade for the company and will make sure that they are reputable in their approach and able to assist you with one of these loans.
#6: What sort of things should you keep in mind when shopping for a debt consolidation loan?
If you know that you are looking into debt consolidation loans, you will want to make sure that you are prepared for the entire process. Consolidating your debts will help you to understand how best to manage your financial issues in a way that suits you. It would also be wise to undergo credit counseling so that you can come out of the other end of this process better for it and with the skills and knowledge to keep yourself out of debt in the future.
Credit Issues
When you are looking to get a debt consolidation loan, one of the first questions you might ask yourself is whether you are able to get one with a less than stellar credit score. The good part is that you can – but you will want to explore a number of different avenues to be on the safe side. These tips show you exactly what you should know about how your credit score might affect your debt consolidation loan situation and how you can control your destiny in that regard.
#1: Get your credit score as high as you can before applying for a loan
Once you pull your credit report, go over it thoroughly to make sure that everything on it is legitimate. You need to be sure that you were not the victim of identity theft and that there are no erroneous credit accounts open in your name. This should be done prior to consolidating your debt, so that you don’t take on any more interest than you have to.
#2: Search for lenders who cater to people with bad credit
It is always important that you give yourself the best shot at success when it comes to applying for your debt consolidation loan. If you know that your credit is not great, you should first and foremost start looking into companies that provide these loans for people with lower scores. This way, you won’t waste any time and will go directly to the companies that will be able to help you out.
#3: Find the best rates by shopping between different debt consolidation loan companies
Once you have put together a list of the many different debt consolidation loan providers out there, you’ll be in a great position to lock in a rate you can afford. Usually, a debt consolidation loan company will figure out your rates on a case by case basis. You’ll be able to do this when you reach out to them and disclose all pertinent information during the application period. Once your application goes through, the debt consolidation company will make you an offer with years, interest rates and other terms laid out. From here, you will have the chance to shop with many different debt consolidation loan providers who will also offer you a set of rates and fees. You can then make the best decision for you.
Tips For A Successful Loan Period
In order to make sure that this debt consolidation loan helps you in the long run, you will need to use it in a way that will make it a successful endeavor. Start with a few of these tips.
#1: Get the loan set up in payments that you can afford easily
When you first approach debt consolidation loan companies, preliminary conversations will revolve around how much money you are able to pay each month on the payments. Never bite off more than you can chew in this regard, because last thing you would want is to default on the loan after taking the time to consolidate your debt.
#2: Lock in interest rates that are fair
If you speak to a company and don’t feel like you have gotten an interest rate that is fair to you, never be afraid to keep shopping. It is better to be patient and shop around than it is to lock in rates that you are not able to afford. This is a loan that might be part of your financial life for some years – so take the time to get rates that are satisfactory to you.
#3: Honor the loan and set up automatic payments if possible
Most importantly, it is important that you follow the terms of your loan and honor them. Even a late payment can adversely affect your credit score, so always do your best to pay on time and in full. You can make this easy by scheduling payments to be automatically deducted from your checking account. This way, you will know that the money is taken out and won’t have to worry about it.
Follow these points and begin reaching out to debt consolidation loan businesses. It’s never too late to consolidate your debt accounts and get your life and finances back on track! With a little patience, determination, and perseverance, you can come out of the other side of this as a more financially responsible person. You won’t believe how much better you feel in your day-to-day life without a pile of debt hanging over your head. Don’t wait; start doing research now to find the company that’s best for you. It won’t happen overnight, but if you stick to your program, there’s no reason why you can’t be debt-free!
