Debt consolidation is a common practice to manage multiple credit accounts into one monthly payment for ease of debt management.
It is a simple process, but you have to do it right in order to effectively maximize its advantages for the most benefit for you.
The basic debt consolidation guide involves the 5 steps below, you can get started right away by following them for consolidation of debt:
Request a copy of your Credit Report from Credit Bureau
You have to know the loan amount you owe to each creditor and the latest status for each account. The best way to get this information is from your credit report.
Most countries offer a free credit report each year for their people. So, check it at the credit bureau at your country.
In the report, you will know your current credit rating and the account status with the amount owed to each creditors.
It is important to know your credit rating because this figure is affecting the interest rate you may be offered when applying for a loan consolidation.
Find a good reputable debt consolidation company
Even though you have many choices to select a debt consolidation company to consolidate your debts, it does not mean you can simply choose one.
Beware of many scams that are waiting for you to fall into their traps. You have to put in efforts in finding a good company with tracked record and have a good reputation in the financial market.
You may do one more precaution step by checking the shortlisted debt consolidation companies against the Better Business Bureau (bbb.org) to ensure these companies are legitimate before you choose the best company among them.
Select the best debt consolidation program
Once you have identified a good company, review through the proposed debt consolidation programs.
The counselor may propose more multiple programs for your selections. The counselor should explain in details on each program for and he may recommend the best option for you.
Don’t simple sign up the proposed debt consolidation program, instead take some time to digest the information and make sure your questions to the counselor are answered.
If you find none of the proposed debt consolidation programs are meeting your requirements, you may want to go back to step 2 and find another debt consolidation company.
Repeat the process until you find the best debt consolidation program that meets your requirements.
Decide a debt consolidation loan
At this step, you may be recommended many debt consolidation loans that are offered in the selected debt consolidation program.
Review these loans and find loan with amount and repayment terms that best fits your current financial needs.
The interest rate, loan amount, repayment terms are among the factors to be consolidated when selecting a debt consolidation loan.
Work your way out of debt
Once you have signed up with a debt consolidation program, you will need to make one monthly for repaying the loan.
Don’t create more debts with these credit cards while you are working your way out of debt. You will be debt free soon if you consistently make the repayment of debt consolidation loan until it is paid off.