For many people, multiple debts have become a fact of life.
Recent statistics have shown that the average American family has almost $10,000 in credit card debt and more than 40% of American households spend more than their total income.
Debt consolidation may enable you to regain control of your finances, even if you have a poor credit rating.
Consolidation combines all or some of your debts, such as credit card debts, into a single bill with one easily manageable monthly payment.
Rather than paying multiple creditors each month, you would make a single payment to the consolidation company who would then distribute it to your various creditors.
The consolidation company may be able to negotiate with your creditors to reduce monthly balance, eliminate late fees, lessen monthly payments, and reduce time frame in which the debt will be repaid.
These changes could possibly save you money over the long term.
It is advisable to determine how much you owe prior to applying for consolidation.
The first step is to list all of your creditors and how much you owe each one.
Also include the monthly payment due for each creditor.
This process of evaluating your debts may help you to determine how much you owe in total and what you can afford for a loan payment if you do consolidate.
Consolidation is one option to eliminate or reduce your debts.
Consolidating your debts into a single monthly payment may enable you to manage your debts more effectively by allowing you to concentrate on this single payment rather than several every month.
Additionally, it is much easier to maintain one payment than several payments all with different due dates.
This may reduce missed or late payments, which in turn could improve your credit score over time.
Debt may be consolidated either with or without a consolidation loan.
Many companies that specialize in consolidation may offer packages to manage your debts without requiring you to take out a loan.
They will make arrangements with your creditors to have your interest rates lowered and manage your payments for you.
These companies generally charge a fee for their services.
Secure consolidation loans are another option to help manage your debts.
If you are a home owner you may also wish to consider an equity loan.
Equity loans use the appraised value of your home and other capital to obtain the financing you require.
Borrowers are advised to research consolidation companies carefully.
While there are many reputable consolidation companies available, there are also some that are less reputable.
Be wary of any companies that make too many promises that do not seem realistic.
One way to ensure that you are about to deal with a reputable company is to contact the Better Business Bureau.
If there have been complaints issued against the company you are considering, you will be able to obtain that information there.
You may also be able to determine how many complaints were issued against them and why.
Consolidating your debts may eventually eliminate or reduce your debts and could improve your credit rating.
Once your debt has been consolidated, it may be a good idea to refrain from using your credit cards.
By following these simple tips you may be able to eliminate your debt and improve your credit score over time.