What is a debt consolidation
A credit card consolidation loan is a personal loan used to manage credit card debt. It works by moving your credit card balances into a new personal loan, with a new interest rate and repayment terms. Generally, it takes three steps to consolidate your credit card debt:
After paying off your debt, the goal is to avoid taking out another debt consolidation loan for credit card debt. Having multiple debt consolidation loans on your credit report looks bad on future credit card and loan applications.Click to rate this post!
We understand that this can be a very confusing and frustrating time. Our company will hold your hand through the entire process. You can finally rest your head at night knowing that you are working with a company that specializes in eliminating and settling UNGUARANTEED DEBTS.
I can consolidate my debts into one monthly payment.
Always pay on time Payment history accounts for 35% of your credit score. If you are late on a payment, make the payment as soon as possible; it will make a difference. Your credit reports will track whether your payments are 30, 60 or 90 days late.
Monitor your credit regularly Review your credit reports regularly to make sure they are accurate and to detect areas where you can improve. Request a free copy of your reports at annualcreditreport.com. Eligible Wells Fargo customers can also access their FICO Credit Score easily through Wells Fargo Online Banking. Don’t worry, requesting your score or reports in these ways will not affect your credit score.
Know Your Limits Being close to your credit limits or maxing out your credit limits could negatively affect your credit score. It’s a good practice to keep the balance of your revolving credit lines below 30% of the limit.
If you have high-interest credit card balances on several accounts, making those monthly payments can be so difficult that you can’t afford the things you really need or want, let alone save money. It can also stress you out. In this situation, debt consolidation might be a smart move. But before we get started, let’s dig deeper to understand how debt consolidation can affect your credit scores.
Consolidating your debt can save you money. If you have credit card debt that charges 20% or more interest, consolidating into a new credit card or loan with a lower interest rate will save you money. Do the math for your specific debt to make sure you’ll save more than the fees you’ll pay for balance transfers.
You can also simplify your payments. When you have to manage many accounts, you are more likely to make a mistake and miss a payment. Late and missed payments can affect your credit score, so consolidating everything into one monthly payment could help protect your credit from a payment mishap.
Government help to consolidate debts
Remember that having too much debt and not paying it on time affects your credit score. This score allows financial institutions to evaluate if you pay on time and if you have the capacity to apply for additional credit. You need to maintain a good credit history so that in the future you can seek financing for everything from applying for a credit card to buying a car or a house.
Pay the consolidation loan on time to improve your credit score. Once you take out a consolidation loan, avoid incurring other debts to prevent going back to the same situation as before.