Improve Your Credit Score How to Consolidate Debt History of Credit Scores FAQ
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How to Consolidate Debt

Consumers across the nation are struggling to manage their debt and regain control of their financial lives. This is one of the reasons that so many consumers explore the possibilities of debt consolidation. In this process, a group or all of your debts will be paid off and rolled into a single loan that you will gradually repay over time. This is one of the most popular forms of debt reduction because it allows you to satisfy your creditors and work within your financial means. Your consolidation loan will be calculated according to your existing income level, so you can afford the monthly payment. Here's how the process works:

  • Assess your finances: Take an honest assessment of your financial situation. How much are you currently making? How much do you owe? Are you having difficulty making minimum monthly payments? It might be wise to write out a list of all your debts - while it may be difficult to look at, it's important that you understand where your financial decisions have taken you.
  • Explore your options: How serious are your debts? Are you facing bankruptcy? Are you incapable of budgeting your way out of this? Look into the different options you have, which include debt consolidation, debt counseling and bankruptcy, among others. Each option has its own benefits, but it's important to select the option that is best for you and your situation.
  • Use an online service to contact consolidators: Through a service such as ReduceMyLoanPayment.com, you will be personally matched with respected consolidators in your area who have the programs necessary to consolidate your loans. You'll need to provide basic information such as how much you owe, how much you make, and the best way to contact you.
  • Review offers and compare: One of the benefits of exploring consolidation online is that you can receive multiple consolidation quotes from a variety of lenders. Carefully look over each proposal you receive. Review factors such as which debts would be satisfied, the consolidation interest rate, your proposed monthly payment, the loan term and any other terms or conditions such as prepayment penalties (if any). Compare the consolidation loan's interest rate to your existing debts' - it may be lower or higher. Compare the monthly payment to your existing minimum payments. Assess which proposal, if any, provides you the greatest opportunity to get out of debt smartly. If you have any questions about the process or any fees/penalties, be sure to ask them at this stage.
  • Select a proposal and consolidate: Your loan consolidator will begin the process of paying off your debts and creating a consolidation loan. Continue to make your monthly payments until you are notified that your consolidation loan is complete.
  • Pay off your debts comfortably! Now that you've consolidated your debts, you can begin to regain control of your financial life. Be sure to pay your loan on time each month and, if allowed, pay a little extra each month to reduce the balance faster. Refrain from taking out new debts and instead focus on saving and gradually improving your credit score.

Visit FAQ for answers to more important debt consolidation questions.