Your credit score is stuck below 600 and you have several low credit limit credit cards with high interest and high fees. Chances are all these cards have credit limits under $700, usually $300, and you have maxed them all out. Your credit score is stuck because your “credit utilization” (balances vs credit limit) is 90% or more, instead of 30% or less.
How do you fix this mess and get your good credit back?
Get in touch with a debt consolidation company.
By paying off all these stupid high cost credit cards with a consolidation loan you will raise lower your “credit utilization” ratio to 50%. Realistically your credit score will jump by at least 50 points and, if you can reduce your “credit utilization” to 30% by making substantial payments on the debt consolidation loan your credit score will likely soar another 50 points, provided you have no late payments.
National Debt Relief lists other advantages to a debt consolidation loan.
#1: You will be able to roll all of your debt up into one manageable bill
The main reason that people turn to these loans as an option is because they organize your debt in a way that is far less overwhelming. By having all of their debt reduced to one bill, people will have the opportunity to tackle the payments without feeling overwhelmed. The debt consolidation means that you would only answer to one company as opposed to being hounded by numerous companies. This alone will decrease your stress levels and allow you to pay off your debts in an easier manner. These debt consolidation loans are particularly attractive for people who have a good amount of debt from a lot of different creditors. It will help you to get back on track and avoid adverse actions taken against you.
#2: This is an excellent way to rebuild your credit
If your credit score is in trouble, you will need to look for every avenue possible to build it back up. One of the best ways to go about this is by taking this debt consolidation loan. Your credit score will show that you will only have one major account open with a large amount of debt, as opposed to numerous accounts open with lots of debt. Many people experience an uptick in their credit score as soon as they take on a debt consolidation loan.
People also experience benefits in boosting their credit score from a mental standpoint since having one bill as opposed to many can motivate people to be good stewards over the rest of their financial life.
#3: The loans have reasonable terms and rates
One of the biggest perks that people enjoy when taking on debt consolidation loans is that they generally have very reasonable rates and terms. You will be able to pay the loan off in a way that makes sense to you without worrying about inflated rates that are unfair and predatory. Thankfully, there are a lot of different loan providers out there that make it better for you in terms of getting interest rates that are competitive. You will be able to get the rates that make sense to you when you do the legwork of finding the highest quality and most credible companies.
#4: You will be able to make manageable payments
Debt consolidation makes sense for your bottom line because it allows you to downsize your payments so that they’re reasonable. In many situations, the loan company will ask you how much you are able to afford per month and structure the loan in that manner, as opposed to simply imposing rates on you. Even though this might take you a while to pay off, you are able to get the rest of your financial life back in order and build your wealth.
The ability to pump the brakes on the avalanche of debt that you are experiencing is a big reason that these loans are so popular. You will be able to restructure your finances according to your needs and will do so with the helping hand of a company that is understanding to your situation and able to step in.
#5: This loan helps you to avoid having accounts go to collections
When your accounts go into collections, it can be a big hit to your credit score and to your financial life as a whole. Companies will begin threatening action against you, which could include getting the courts involved, garnishing wages, among other things. When you have a debt consolidation loan, you will buy yourself plenty of time, while also staving off the activity of debt collectors who may not have as much patience.