Personal debt consolidation may not necessarily be too bad for your credit as many people believe. Credit ratings are so important in this day and age, which makes it interesting when you see how many people are suffering from extreme credit card debt. One method to relieve this debt and help out your credit is through a personal debt consolidation loan.
With credit card debt, many people are paying anywhere from 18-25% interest rates. If you can only afford to make your minimum payments, which for some people is hundreds to thousands of dollars, personal debt consolidation may look very inviting and it should.
Consolidating your debt and getting rid of unnecessary lines of credit will actually help you repair your credit reputation. The first step, however, is getting rid of all of your unnecessary lines of credit, from credit cards to personal lines of credit - get rid of it all. This will make your credit report look a lot friendlier to the lenders that view it. You may keep one low interest credit card for emergency purposes only and only for true emergencies. By getting rid of these frivolous lines of credit, you are able to show that you have less borrowing opportunities available to you which means that you are less likely to get into debt.
The second step is to find a lender that can offer you a low-interest personal debt consolidation loan or allow you to take out a loan on your home equity if you are a homeowner. This is a great way and safe way to eliminate debt. You will then use that loan to pay off all of your debt.
Making one payment to your bank is a lot easier than paying multiple lenders. When you set up your personal debt consolidation loan, check to see if your lender will debit the amount of the payment directly out of your checking or savings account. One of the best things you can do to turn around your credit reputation is to have a consistent payment history. As long as you have the funds in your account, you will be able to have a consistent payment history that will help to turnaround your credit report. One payment is a lot easier to track than making multiple payments with many different interest rates. A good credit report is essential if you plan on making any important purchases in the future such as a house or a car and consistent payment history will show you are a responsible individual.