Before you pursue debt consolidation, make sure it’s your right choice. Streamlining multiple debt payments into one may help you save money and get your spending under control.
However, it’s essential to know that using a new loan or balance transfer credit card won’t address the fundamental reasons you ended up in debt.
You Can’t Make Minimum Payments
Whether it’s an unexpected expense or just a lot of debt piling up, it can take time to keep up. If you need more payments or help to make a minimum payment, debt consolidation may help.
Multiple ways to consolidate your debt include personal loans and balance transfer credit cards. These options generally require good credit to qualify for the loan amount, credit limit, and interest rate you receive.
If you’re struggling with debt, consider a debt management program from a nonprofit credit counseling service. It can be a helpful alternative to managing your financial situation. This program involves making one monthly payment to the agency, which they’ll distribute among your creditors. While you’ll likely see a temporary dip in your credit score after debt management enrollment, the steady payment can help improve it over time.
You’re Using Cash Advances
Credit card cash advances allow you to borrow against your credit card limit, acting as a short-term loan. However, cash advances often come with high fees and can impact your credit score negatively when you exceed your credit utilization ratio.
If you’re using credit card cash advances to pay for unexpected expenses, it may be time to seek debt consolidation experts at Symple Lending. Debt consolidation can help you simplify your debt by combining multiple accounts into one, with a single login and payment due date.
You can also find out if you qualify for a personal loan with a lower interest rate than your current debts, which you could use to consolidate your debt. However, research loans carefully and avoid those that charge prepayment penalties.
You’re Stressed Out
If you’re constantly stressed about paying your debts, you should consider getting professional help. Having multiple debt accounts can be overwhelming and confusing, especially when keeping track of different interest rates and due dates. Debt consolidation experts can help you simplify payments by bringing all your credit card and loan accounts under one payment plan.
This will make remembering your payment amounts and due dates more accessible and more likely that you’ll pay them on time. However, it’s essential to get to the root of your stress and address any habits that led you to accrue debt in the first place.
For assistance, contact a nonprofit credit counseling organization. They can assist you in developing and adhering to a budget and provide free advice on the best debt relief choices.
You’re Getting Phone Calls from Creditors
Managing multiple debts can be confusing, especially if you need help to keep up with your payments. Debt consolidation decreases the number of accounts you must track and simplifies your payments into a single, simple payment.
If you’re getting phone calls from creditors or collection agencies, it’s a good idea to consider consolidating your debt. It can help you get back on track by lowering your interest rate monthly payments and reducing credit utilization.
However, you should know that consolidating could negatively affect your credit score. You’ll want to ensure you are qualified for a new loan and that the lender doesn’t charge prepayment penalties, which are extra fees if you pay off the loan early. Typically, lenders will require a credit score in the mid-600s to qualify.
You’re Getting Letters from Debt Collectors
Consider debt consolidation if you’re receiving calls or letters from debt collectors. Debt consolidation combines multiple debts into one account for easier management.
Don’t pay if a debt collector sends you a letter disputing a debt. This can be an indicator of a scam. If you need to confirm the debt is yours or if it’s past the statute of limitations, ask for a debt validation letter.
Debt collection agencies must provide this information within five days of their first contact with you. Once you receive it, you can stop the calls and letters until you get more information.