Paying Off Your Debt Will Take Six Months, Relatively High Credit Score, Struggling to Manage Your Credit Card Payments are 3 Signs For A Consolidation Loan.
Introduction to Consolidation Loan:
Debt consolidation loans are something you may have heard about before. A personal loan is used to pay off a high-interest debt that’s bothering you. Most people seek this loan when they have credit card debt. Consolidation and refinancing options for student loans are also available; If you have student debt, you might find sites like Purefy to be an excellent resource for finding the best and most affordable loans. However, there are occasionally other reasons you’ll look for the best debt consolidation loan, such as if you’re getting bogged down with student loan payments, medical bills, or other concerning debts.
There are some distinct signs that a consolidation loan is a wise financial decision, and we’ll cover three of them right now. If you get this type of loan, it can allow you to pay off several credit card balances, streamlining your repayment plans. It can also take a load off your mind if you’re losing sleep over your debt.
1. Paying Off Your Debt Will Take Six Months or More
The first thing to consider if you’re looking at some consolidation loan options is how long it might take to fully pay off the credit card companies or other entities to which you owe money. If you feel like you can pay them off within a few weeks or even a couple of months, consolidation is likely not the right move for you.
Maybe you have debts that will take you six months to pay off, or a year, or even longer. If so, that’s when a debt consolidation loan will start to look more attractive. That is because one of these loans will yield a lower interest rate. This might save you hundreds of dollars, or even thousands in some instances.
You’ll need to do a little math to determine how long paying off your debts will take. There are credit card calculation tools online that will help you do that. You plug in the amount you can pay each month, the total debt amount; and the interest rate, and it gives you your expected payoff date.
2. You Have a Relatively High Credit Score
Next up, you should look at how high your credit score is and whether it’s in the range that will allow you to qualify for this type of financial product. If you have a lower credit score; many of the entities that might offer you a debt consolidation loan will not be willing to do so.
The next obvious question is how high your credit score needs to be for you to qualify for consolidation loan offers. That varies a bit depending on the company, but lenders are often
looking for a FICO score of 670 or better. A score that’s consistently in the high 600s or over means that you should be able to attain a low-interest loan without much difficulty.
If you’re not certain about what your credit score is; there are several tools you can find online that will show it to you. You should know that checking your credit report will not negatively impact your score.
3. You’re Struggling to Manage Your Credit Card Payments
The third determining factor regarding whether or not you should get a consolidation loan is how well you’re managing your credit card payments, assuming you owe multiple credit card companies money. If you have several outstanding debts to various companies; it makes it more likely that you might miss a payment; get charged a late fee, or forget a critical due date.
Having a set amount to pay each month makes things a lot easier. That is the main point of debt consolidation: you’re simplifying the payment process by only owing money to one entity. It is easy to keep track of both what you owe and when you need to come up with that money.
Debt Consolidation Loan Can Help Many Individuals
If you meet these three criteria, getting a consolidation loan can make your life a lot easier. You will probably get out from under that debt faster; you could end up paying less interest along the way.