How to consolidate your financial debt

Debt Consolidation is an option that the Federal Trade Commission proposes when collecting calls and overdue notifications become a daily standard. Although no single debt management strategy is effective for everyone, combining multiple debts into one payment can work if your income level matches your desire to repair. bad financial situation.

Preparation steps

Step 1
List each debt, including financial company, account number, and outstanding balance.

Step 2
Make a detailed breakdown of each debt and look at your documents that relate to credit cards, personal debts such as medical bills, student loans or federal student loans. Although the two options are consolidation loans or credit card balance transfers, these are additional options that apply to specific categories.

Step 3
You can get a free credit report from one of the three main reporting agencies. Review each account to ensure that the information currently contained therein, and accurately, before you attempt to consolidate any debts. Contact the financial reporting agency and the company providing the information in writing if you find an error. The Federal Trade Commission outlined the dispute procedures and provided the disputed letters. The template is available on your website. This step is important because your credit history and credit score affect interest rates and deadlines.

Discover the loan options

Debt consolidation loans are available from banks, credit unions, finance companies and the federal government. These loans include personal loans, equity loans, and student loans.

Personal Loans

Use personal loans to consolidate personal and credit cards. It is important for the comparison shop if you choose this option, as the lender's requirements change a lot. Some offer special loans for debt consolidation, while others lend to use for any reason. Interest rates depend on your credit score. This is especially true for unsecured personal loans. Use a debt consolidation computer to compare interest rates and term limits to ensure you choose the best deal.

Home loans

The finance company has enough capital so you can consolidate all your debts with a home loan. The interest rate is usually lower, and the longer term may be longer, since your home acts as a mortgage, reducing the risk of a financial institution. This type of loan may also be available.

Student loan consolidation

Many banks and private finance companies offer individualized student loans. The Department of Education provides federal loans to students. While you can include federal and private loans in a private United loan, you cannot include private loans in federal loan consolidation. Consolidated private student loans and federal loans. Unlike most loans, interest rates and terms with a federal loan do not depend on your credit score.

How to consolidate your financial debt

Credit card balance transfer

If most of your debts are for credit cards, transferring balances may be a good option. This involves opening a new credit card account that is only used to transfer the outstanding balance on your current credit card. Find a service that can give you enough time to pay and have low or no interest rates and compare the fees that may apply when the service expires.

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