Sunday, March 2, 2014

What is a credit card consolidation loan?

A credit card consolidation loan takes the balances of all of your qualifying credit cards and combines them into one loan payment. The result is an affordable payment, an improved credit score and a lower interest rate. This payment can be calculated using our debt consolidation calculator listed above. Transferring all of your high balance cards onto one low interest rate card or a loan can help solve your current credit problems. A debt consolidation can assist with helping you regroup your financial lifestyle.

This will help you avoid further collection activity such as a default judgment which can eventually lead to garnishment of wages and repossession of personal property. To obtain a loan, you will have to make an appointment to go over the application process. To apply, you will need a copy of your most recent credit report or merged reports from Experian, TransUnion and Equifax. You will also need to know your FICO or credit score. Having copies of your latest bank statements, credit card statements and all other revolving credit accounts will be beneficial for your first visit. A credit counselor will be able to directly contact your creditors to work out settlement agreements or exact amounts for paying off your balances early. In some cases they can reduce or eliminate some debt. Once approved, you will have a new loan balance and affordable monthly payment rather than several high payments.

Credit card consolidation benefits

The main benefit of having a credit card consolidation loan is to lower your payments and make the balance more affordable to pay off. Instead of paying up to 30 percent or more interest on one or more cards, you can utilize a lower interest rate that keeps the payment with a reasonable range and helps you achieve a balance pay-off much quicker. This will also improve your credit score greatly by decreasing your debt-to-income ratio and showing most of your credit card accounts paid in full.