If you ask me which is better, refinance or debt consolidation in order to package the loans in a better way. Obviously a single loan to replace all your other loans at a lower rate is a better way but there are few things you should keep in mind and watch out for:
Debt Consolidation Tips
Is consolidating your debt really a worth? If you have decided that you will consolidate your debt into cheaper loans then be prepared to pay a cost. You have to pay for the privileges of getting a fresh loan amount.
It is advisable that you stay disciplined and committed with what you are doing. Getting a new loan to get rid of older ones involves loads of risks. You are doing nothing but piling up an additional debt amount. You should not take things for granted here.
Maintain a good credit balance. One of the ironies in personal finances is that the people having a good amount of debt always have the worst credit figures. In order to qualify for the best loan offers maintain a good credit balance.
Take care of your collateral securities and secured loans. Many of the people will consolidate their debts with the help of their home equities. But this is not at all a correct step one should follow because at the end of the day if you don’t pay back your debt amount you have to face huge penalties.
Best Debt Consolidation offers for people with Good Credit
With the help of cheaper loans you can consolidate your debt primarily in two ways:
First, Take help from the lending networks. If you are the prime borrower then you could have easily got the loan from your bank. But If you have a good credit then you can also get loans at a cheaper interest rates. Get yourself registered with social lending networks. Following are the benefits of the lending networks:
- You can borrow up to $30,000 through lending networks
- Fixed rate of interest are charged to you
- Fixed monthly payments can be made
- Loans have a term of 3 years at least.
- You can pay off your debt amount in full without penalties
- Privacy is ensured at all the levels.
The only thing you need to keep in mind is that your FICO score should be above 660 and your debt to income ratio should be less than 25%.
Secondly, Consider only balance transfer credit cards. Always use lower interest rate credit cards if you are not sure of your expenses. If you have a good credit but have higher interest credit card debts then you can easily lower your credit card payments with the help of balance transfer cards. If you want to pay your debt in the intro period then 0% APR credit cards can be the vital choice.
But what if you have a bad credit? Then what will you do?
The most important things you should work on here are :
1.) Clean up your credit: In order to qualify for better terms it is important for you to have a good credit score first. Then you will be able to gain leverage with all the lenders. You will have better negotiation powers with yourself if you have a good credit score.
2.) Take help from Government wherever possible: The best way to resolve your debt issues is to seek government assistance. I am sure debt and credit counseling will be available for free through government bodies.
3.) Hire the best professionals: Take help from the best debt settlement companies only. Study about their programs in details before taking help from them.