CHOOSING A DEBT CONSOLIDATION SOLUTION
Knowing you need to take action against your high-interest debt is a great first step.
But it’s just the beginning. Where you go from here can make all the difference in how successful you are at eliminating your debt, so you’re likely to have lots of questions about debt consolidation – and we’re here to provide the answers you need to choose the best debt relief program for you.
What’s the difference between debt consolidation and debt relief?
With debt consolidation, you take steps to restructure your existing debt by refinancing balances owed – often into a single loan with a lower interest rate. With debt relief or debt settlement, your lender may reduce the balance you owe in an attempt to help you avoid defaulting on the entire loan. This helps the creditor recover most of what you owe and reduces your debt, but it can negatively affect your credit. That makes debt consolidation the better choice whenever possible.
What options exist for people with bad credit?
If your credit is less than ideal, you still have options for debt consolidation. If possible, improve your credit by making regular payments on time and checking your credit score periodically for improvement. Otherwise, you can get what’s called a secured loan, which uses collateral, like savings or some other asset to secure your loan for debt consolidation.
Are debt consolidation loans bad for your credit?
While closing loans can temporarily lower your credit score for some people, the act of debt consolidation should ultimately and quickly improve your credit. This is because debt consolidation is for those with problematic debt – usually high balances financed with high-interest rates. Having a high debt-to-income ratio also negatively affects your credit, and by reducing your debt, you can improve your credit.
Is debt consolidation a good idea?
The answer to this depends on your circumstances and types of debt, but many people can benefit from debt consolidation if you do it in the right way. Taking action yourself to transfer balances from high-rate credit cards and loans to a lower-rate loan can help you save on interest, giving you more money to pay toward your debt and to dedicate toward other financial goals.
It’s especially a good idea when you use the right solution, like a Red Rocks Debt Elimination Loan. This loan is designed just for those seeking to reduce debt and interest owed to live each day more fully. Combining debt into the wrong type of solution can actually do more harm than good, so be sure to work with a reputable lender to eliminate your debt.
If you have any questions about debt elimination, we’d love to help. Give us a call at 720.640.7243.
