Personal debt consolidation may not necessarily be too bad for your credit as many people believe. Credit ratings are so important in this day and age, which makes it interesting when you see how many people are suffering from extreme credit card debt. One method to relieve this debt and help out your credit is through a personal debt consolidation loan.
With credit card debt, many people are paying anywhere from 18-25% interest rates. If you can only afford to make your minimum payments, which for some people is hundreds to thousands of dollars, personal debt consolidation may look very inviting and it should.
Consolidating your debt and getting rid of unnecessary lines of credit will actually help you repair your credit reputation. The first step, however, is getting rid of all of your unnecessary lines of credit, from credit cards to personal lines of credit - get rid of it all. This will make your credit report look a lot friendlier to the lenders that view it. You may keep one low interest credit card for emergency purposes only and only for true emergencies. By getting rid of these frivolous lines of credit, you are able to show that you have less borrowing opportunities available to you which means that you are less likely to get into debt.
The second step is to find a lender that can offer you a low-interest personal debt consolidation loan or allow you to take out a loan on your home equity if you are a homeowner. This is a great way and safe way to eliminate debt. You will then use that loan to pay off all of your debt.
Making one payment to your bank is a lot easier than paying multiple lenders. When you set up your personal debt consolidation loan, check to see if your lender will debit the amount of the payment directly out of your checking or savings account. One of the best things you can do to turn around your credit reputation is to have a consistent payment history. As long as you have the funds in your account, you will be able to have a consistent payment history that will help to turnaround your credit report. One payment is a lot easier to track than making multiple payments with many different interest rates. A good credit report is essential if you plan on making any important purchases in the future such as a house or a car and consistent payment history will show you are a responsible individual.
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Debt Consolidation Ezine Articles
Debt Consolidation Calculator
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Consolidating your debt in a single low-interest loan can save on interest payments and speed the process of paying off debts. This calculator will help you determine how much you can save by consolidating. To begin, choose one of the options below, then select "Credit Cards" at left.
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Consolidate your loans
Most people have more than one debt. You may have high interest credit cards, loans and mortgages. To pay off one debt you may need to borrow from someone else, creating yet another debt. The solution to this problem is debt consolidation.If you own a home, you can get a debt consolidation home equity loan. With a debt consolidation loan you will have to consolidate each of your high interest credit cards, as well as your consumer loans, into one inexpensive and affordable monthly payment with low interest.Consolidate debt with home equity as securityA debt consolidation home equity loan is a secured loan where your property will be security against the loan. The lender will have a lien on your house until you pay off the home equity loan in full. While you'll continue to own your home as loan collateral, the debt consolidation loan will keep the creditors away and keep you out of bankruptcy. You'll be able to save a little, because the single monthly payment will be considerably less than the sum of the ones you had before.The first thing to do once you've obtained your debt consolidation loan is to look over the use of your credit cards, so that you don't use any of them in times of temptation, thereby increasing your debt. This will definitely put you right back in hot water.Tax deduction and home equity loan consolidationAnother possible advantage is that interest you pay on your equity debt consolidation loan may be tax deductible. Normally, if you add your first mortgage to a new debt consolidation loan, and the total does not exceed 100% of the appraised value of your property, the interest you pay will be fully deductible. Your tax consultant can advise you on the matter, and it's always a good idea to check with him or her.
Debt Consolidation - Loans, Debt Management, Consolidate loan, Debt help, Bad Credit
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Easy Tips for Personal Debt Consolidation
Whether it is credit cards, student loans or personal loans, personal debt consolidation can help you get out of the whole that you inadvertently put yourself in. There are several components that come into play when you are dealing with personal debt consolidation.
Next to credit cards, interest rates are the next biggest culprits in causing debts. More and more people have bad credit meaning that more and more people have to pay insane amounts of interest. The interest rate for personal debt consolidation tends to be dramatically lower than what you would have on your credit cards, personal lines of credit and other interest on unsecured debts. The main reason for this is because a personal debt consolidation loan is secured debt and collateral is used as a guarantee on the loan.
Collateral for personal debt consolidation loans are commonly equity on your home if you are a homeowner or a vehicle if you are not. The collateral is a guarantee to the bank that you will pay your loan back. If you do not, then you will loose whatever collateral you put up to secure the loan. Believe it or not, the bank does not want to take your collateral. They do not want you to default on your loan and take you vehicle. What they do want is to help you make your payments on your loan on time. And they will do this by calling you and reminding you when you are late on your payment, even if it has only been a day or two.
If you do not have collateral to put up, you may be able to get an unsecured personal debt consolidation loan. These loans are harder to qualify for and the interest rate will be higher. These types of loans are more suitable to those individuals that have small amounts of credit card debt that they would like consolidate for convenience purposes.
The best debt for personal debt consolidation is unsecured debt with high interest rates. This includes debt from credit cards and personal lines of credit that have less than favorable interest rates. Your goal by consolidating this debt is to benefit from having to only make one payment and having a lower interest rate.
Debt that is not exactly suited for personal debt consolidation includes federal student loans, government related loans such as loans for first-time homebuyers and home equity loans.
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