A debt consolidation loan can be a useful tool when it comes to getting out-of-control debt back in hand. Among the possible debt strategies for Californians, consolidation can be one of the most affordable and fastest means of eradicating credit card debt.
Taking a debt consolidation loan could help you combine a multitude of high-interest debts into just one at a more favorable rate. This, in turn, can help you pay off those debts more quickly.
Here’s how to get a debt consolidation loan.
Review Your Credit History and Score
The higher your credit score, the better the deal you’ll be eligible to receive on your consolidation loan. So, before you apply for any type of consolidation vehicle, review your credit history, and check your credit score.
Going over your credit history might reveal you’re being held responsible for something you did not purchase, which is dragging down your score. Reviewing your report provides you with an opportunity to clear up any discrepancies with an eye toward boosting your score. You can get copies of each of the three of your credit reports free at AnnualCreditReport.com.
Anther smart play where your credit history is concerned is to pay off as many of the smaller debts shown as possible. Outstanding balances comprise 30% of your credit score. The less debt you have on record, the higher your credit score will be, which will translate into a lower monthly payment on your consolidation loan. Banks typically offer customer credit score information for free.
Calculate Your Debt and Payments
Arriving at an accurate amount for how much debt you’ll need to consolidate will help you determine how much to borrow and perhaps what type of consolidation to pursue. For example, if you’re thinking to go with a balance transfer credit card for California debt relief, you’ll need to be certain you can pay off the entire amount before the grace period expires.
It’s also a good idea to figure out the grand total of your monthly payments, so you’ll know whether the payment on the consolidation loan makes sense. If it’s more than you’re currently paying each month, it might be more advantageous for you to proceed without the consolidation — all other factors being equal.
Bottom line, having these numbers in hand will facilitate the use of a consolidation calculator to help you determine whether or not this approach will deliver the outcome you’re seeking.
Shop For the Best Solution
Numerous types of loans are available to help you consolidate credit card debt. Each of them has different terms, different interest rates and different considerations to ponder.
First and foremost, though, it is of utmost importance to be certain you can live with the requirements a loan will impose before taking it. Otherwise, you could find your money problems exacerbated. Take some time to review all your options, before choosing the approach you’ll take.
With that decision made, you can then look for a lender offering the best terms.
Complete the Loan Application
Gather all the documentation you’ll need before filling out an application. At minimum, you’ll be asked to provide proof of your identity, proof of residence and proof of income.
Before signing the application, read it over carefully to be certain you understand everything. Ask questions of the lender’s rep if you have trouble grasping any of the information presented. Pay careful attention to what will be required to consider the loan paid in full.
These four steps will help you get a debt consolidation loan that will benefit you, with as few hassles as possible.