[dropcap]I[/dropcap]f you have gone through the advertisements in the financial market, you must know that the consolidation promises to get you out of your debt very fast or they can reduce your payments by 50%. Here are some effective steps, by which the consolidation process can become easy.
Step 1: Obtain FICO score and Credit Report: The loan terms will be entirely based on the credit report or the FICO score. You will only be qualified for an attractive rate, if your credit score is significantly high. Make sure that your credit report is displaying the accurate results. If you come across any inaccuracy, just go ahead and resolve them.
Step 2: Go Through Options: As there are several options for consolidating your debt, you should consider all the options to find out the best one that suits your needs.
- When you want to save money, but are not struggling through financial constraints, you can pay off your debts, as soon as possible, by prioritizing them. Start by paying the loans, with the highest interest rates and then go with the next higher ones. Continue this process until all your debts are paid off.
- If you are unable to pay the expenditure of your car, you can think of selling it for repaying your loan.
- You can communicate, with an agency of credit counseling. The reputable agency can manage your finances at a very low cost.
- For debt consolidation, you can also borrow from the life insurance company. If you possess whole life policies, you can avail the loan against the cash value of the policy.
- Just call up your credit card company and negotiate for a better rate. If you are unable to obtain a good rate, you can transfer the balance of the credit card into lower rates.
Step 3: Understand The Differences: You should clearly understand the differences between debt negotiation, consolidation loan and debt management programs.
- Debt negotiation is basically settling for an amount, which is lower than what you actually owe.
- The consolidation loan helps in paying off all your other debts. The consolidation loan can either reduce your current interest rate or decrease your monthly payments.
- The debt management agency can play the role of the middle-man between your creditors and you. They can negotiate for lower interest rates.
Step 4: Pay Off Your Debts Fast: Your main aim should be to get rid of your debts, as quickly as possible. If the reduced payments enlarge your repayment period, you may end up paying more interest. Create your budget, which keeps you safe, as well as repays the highest possible amount.
You should go through the entire application process to get your loan approved. Though it may take some time, you must ensure the proper choosing of a suitable option. Try controlling your expenditure until your debt gets paid off. You can maintain the controlled lifestyle, so that you do not dig yourself into debts again and again.
Jerome Atkinson is a professional debt consolidation expert. In this write-up, he is providing some effective steps for consolidating the loans.
