Whether you are on the verge of bankruptcy or just want to lower your interest rates, debt consolidation might be a good option for you. When you consolidate your debt, you will receive one loan to pay off all of your debt. Here are four great benefits of consolidating your debt.
Lower Interest Rate
If the interest rates on your credit cards are really high, you will have a much more difficult time paying them off in a timely manner. Debt consolidation combines all of your debts into one loan that has a much lower interest rate. If you consolidate your debt, your monthly payments will be lower, and you can pay off your debts a lot faster.
No More Collection Calls
If you have gotten behind on your credit card payments, you will likely receive several collection calls a day. Some of these debt collectors are very aggressive and can even threaten to take away your home and other assets. If you take out a debt consolidation loan, these creditors will not be able to call and harass you anymore. Just call all of your creditors and inform them about your debt consolidation.
Improved Credit Score
Another great benefit of consolidating your debt is that it can improve your credit score over time. If you start making timely payments on your debt consolidation loan, your credit rating will go up. However, do not close any of your credit cards until you have the loan completely paid off. If you close a credit card, your overall available credit will decrease, making it look like you have maxed out all of your credit cards.
Have you ever gotten stressed over so many bills that you forgot to pay one of your credit card bills? Although it is an honest mistake, being late on your credit card payments can negatively impact your credit score. When you consolidate your debt, you will only have to worry about making a single payment every month. One loan is definitely a lot easier to manage than four or five different credit cards.
If you want to get out of debt faster, you should consider consolidating your debt. Call up a reputable debt consolidation agency and inform them about your situation. A knowledgeable credit counselor will talk to you about your finances and determine if you are the right candidate for debt consolidation or not.