If you find yourself under a mountain of debt, chances are it has affected your credit rating. A poor credit rating can follow you around, rearing its ugly head whenever you try to apply for a new credit card or buy a house or a car. Pesky high interest rates can either make or break a deal, and it all comes back to your credit score, which, in turn, is reflective of your mountain of debt. It’s a vicious cycle, but—lucky for you—it’s a cycle that can be broken.
Bill Consolidation
Thousands of people have broken the cycle of mounting debt through debt and bill consolidation. To consolidate bills, you simply move all of your debts into one spot, whether through another credit card or a loan.
If your debt consists of several maxed-out credit cards, you can consolidate credit card bills into one manageable monthly payment by using balance transfers. Many credit card companies provide balance transfers free of charge. Make sure the new card has a high limit to accommodate all of your smaller balances. It must also have a lower interest rate than what you are already paying. Otherwise, you’ll end up racking up even more interest and be worse off than before. Beware of credit card offers with “teaser” introductory rates that jump up after only a few months, or even a year. While a year of super low interest rates may sound enticing, it may cost you more in the end. If it will take you longer than a few months to a year to pay off your debts, it’s better to go with a slightly higher interest rate that will stay put until the whole debt is paid back.
Bill Consolidation Loans
When banks consider you for a loan, they mainly look at two things: your credit score and your income. Your credit score reflects your financial history, and your income reflects your financial potential. However, even a high income isn’t a guarantee for a good loan, since jobs can be lost. The interest rates lenders give you on a loan are based on these things and have little hope of changing, unless you own something of considerable value, such as a house.
Many people leverage their homes in order to get a secured loan for bill consolidation, which usually comes with lower interest rates. With a secured loan, or one that is backed by collateral, banks take less of a risk, and will be more willing to loan you more money at a better interest rate. If you have neither a good credit score nor a home for collateral, you can expect to pay a higher interest rate on your loan. Your best bet is to call around and compare quotes. Most companies offer quotes for free.
Choosing the Best Bill Consolidation Company
Letting a professional handle your situation is one of the best ways to consolidate bills. There are many benefits to handing over the reins, but before you do, make sure you chose a good company. Always ask about the costs up front, and make sure you get it in writing. A reputable company will be open about the details of their costs and services even before you give them your personal financial information. Look for bill consolidation companies that assign a person to your account. This beats having to explain your situation to a different person every time you call. And, lastly, a quality company will be accredited with either the Association or Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.
Always be a wise and informed consumer, especially when it comes to securing your financial future!