Debt consolidation is coined as the next best credit repair – even after falling for scams & frauds – you can essentially pick up from where you left. It is a form of refinancing that helps you to get a sizable loan and repay all other loans on hand. This frees you up from endless vicious cycle of paying interests and recurring charges from revolving credit.
What is debt consolidation and how it works?
Obtain a sizable loan – banks & debt consolidation companies charged a fee in issuing out a sizable loan to repair credit. Debt consolidation works by taking a big loan, consolidate all expenses and pay off at once. That’s it!
Where do I find debt consolidation loans? The answer: Debt relief companies. For those who don’t want to borrow money from a bank, consolidation of debts could be done under the assistance of debt relief schemes. A company assesses your existing financial conditions and works similar to credit repair services. Then, an agent deems whether you qualify for a Debt Consolidation Plan (DCP)or other types of refinancing services.
Credit repair companies don’t focus on consolidating debts. Only debt relief companies review your current accounts and determine the rate of interests & fee charges to be made after granting debt consolidation loans.
Note: Manage your outstanding balances & debts the right way.
How does debt consolidation boost my credit repair?
Loan from debt consolidation companies, banks or using home equity – various approaches to accepting a good DCP.
One common approach of debt consolidation is to take out a massive loan. When you used a single balance to repay all debt, you effectively eliminated the risk of missed payments, costly fees & charges, financial distress and other ancillary expenses. It boils down to a single debt consolidation payment.
Good news is on the interest-free debt consolidation plan. Sometimes, bank promote free interests for a limited period of time. Make sure the time is spent in repaying the loan. A big loan is essentially a combination of all other debts into a single cc DCP.
Note: Home equity loan is only applicable for those who owned a real estate.
Is it a good idea to consolidate my debt fast?
Ideal or not – does it make sense to use a high-interest loan? Think again. There are debt consolidation companies offering sky-high interests at record rates. It defeats the purpose of repaying credit card debt, college debt or mortgage debt. You’ll accrued bad interests!
Are you going to pay 30 percent for a credit card debt consolidation loan? Of course not. If not, what is an alternative to obtaining better rates. Consolidating of debts is a problem for many consumers. Either the lack of assets to meet minimum requirements or not having good credit scores to qualify for debt consolidations.
Unless you’ve the financing capabilities, it is bad idea to consolidate your payments under a single, big account. The rate of interest is not low. Debt relief agencies do need to keep afloat with the business operating costs. Remember to, do a credit repair first then getting a DCP on-board.
Note: Excellent credit scores attract better financing rates for consolidation of debt.
Which is the best credit repair debt consolidation?
18% to 25% debt consolidation fees – an accurate range for debt settlement companies. A local agency has to maintain marginal profits for survivability. The percentage quoted for settling debt can begin as low as 15% up to 25.5% of total debt consolidated.
For instance, owing $50,000 a settlement of credit card bills, you could be forking out $10,000 for a debt consolidated loan. Computed interest of 20% is based on amount of debt being settled. If you have a good credit score, paying bills on time, it is likely to get a lower interest rate than another individual who has an average credit score.
Scores play a vital role in determining approvals for DCP. National Debt Relief foundation reported that some debtors were turned down by credit card consolidation companies. The reason given was poor credit scores. A simple indicator does puts weight on borrowers.
Note: If not, proceed to another debtor’s solution and not accepting high interests of 30%!
What are the charges of debt consolidation companies?
How much do debt consolidation companies charged – package comprising settlements of credit cards, personal loans & lines, medical bills, collections & repossessions, business debts and student debts. Charges depend on several factors, primarily on credit scores calc. and major debt settlement plans.
Price starts from 14.5% up. Be informed that an excellent fico score is needed. To qualify for a DCP program, it’s advisable to know how to reduce your debt quickly. Aggressive credit repair is a must. It requires more wage reductions & strict budgeting of personal expenses. The same effect as wage garnishment. Get out of credit card debt in approximately 2 to 4 years. Major credit card companies and banks are accepted.
Negotiations will take place directly under the placement of debt relief companies or banks. It is possible to qualify for immediate debt refinancing. Do not take on more loans during the phase of paying off a major credit account. Savings might be added into retirement accounts (such as 401K IRS plan or paying other forms of financing).
Note: Debt consolidation enrollments usually take about 3 years at 18.5% of total debt.
Search for: Who is the best debt consolidation company? | I cannot afford a DCP, how?
Good to know about work: how debt consolidation affects credit repair
No amount of consolidation of debts can help if you performed poorly in financial spending behaviors. Many settlement programs are available for above-average credit scores. Here is a list of the best debt relief companies in 2018 (based on debtor’s reviews):
Accredited Debt Relief | CuraDebt | Premier Debt Help | Oak View Law Group. Several other companies are shortlisted too. Some credit repair companies do make it to the list. Always do research on the types of debt refinancing schemes. One good deal can bring your debt to fruition – getting rid of all consolidated debts.
People also ask:
Does debt consolidation affect my credit score?
What is the best credit repair debt consolidation loans?
How can I get rid of credit card debt?
What is debt resolution?
Which loan company is best for bad credit?
Do you need good credit for debt consolidation?
Quote of the Day: “Art of compounding everything does well – KIG Hall [2013-2018]”
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This article was originally published on April 03, 2014. It has since been updated.