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Debt
Consolidation Does Not Always Require a Loan
Debtors that have excellent credit may be eligible for a
number of debt consolidation options that require no collateral
and provide a low-interest loan to pay off credit card debt. If
they have equity in their home, they have additional options on
higher debt loans when they secure the loan with their home.
When your credit score begins dropping below 720, your
options start to shrink. Unsecured personal loans may incur a
much higher interest rate. The available loan balance may be
much lower also, which can make it harder to borrow enough money
to pay off debt. Sometimes, creditors will require collateral to
secure their interest in the loan. Using home equity loans can
be a risky choice if your income is uncertain.
Balance Transfers
Balance transfers may work, but if you have poor credit it
can be difficult getting a reasonable rate on a balance
transfer. The transfer fees can be high and you may not be able
to maintain the rate for more than a few short months. Also,
universal default
provisions could hike your rates prematurely. Credit Counseling
Credit counseling can help you understand why your credit
score is poor. For some situations, a counselor may suggest
specific actions that could raise your credit score enough
points so that you have better loan or balance transfer options.
For other debtors, a debt management plan may be possible.
In a debt management plan, you agree to a structured
repayment plan that includes anticipated interest rate
reductions to help you save money. Also, you generally can make
one lower consolidated payment each month that is disbursed to
all of your credit card accounts.
A debt management plan enables you to consolidate your
payments without having to shuffle the balances around with
balance transfers or a loan. If you have struggled to get ahead
and believe that you might qualify for a debt management plan,
contact one of our Accredited
Financial Counselors today. You might be able to consolidate
your payments and earn
lower interest
rates without a loan, even with less than perfect credit. |
