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Consolidating Student Loans
Question: I am 23 and I am trying to clear up my credit and some bills that I have that are overdue I know I have my student loan and a few credit cards and some other things that have accumulated over the years. I was wondering if there is a way that I can consolidate all that into one payment that way I can rebuild my credit any advicethat you can advise me with will greatly be appreciated.
Answer: There are several different type of consolidation loans, but the one that will best suit your situation depends primarily on whether or not you own a home and your credit history.
If you own a home, a secured debt consolidation loan may be right for you.
Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at:
https://www.bills.com/mortage/refinance/
This type of loan is essentially a home equity loan which is used to pay off your other creditors, including your student loans. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. However, be careful before you borrow money against your home to pay off credit cards and personal loans; you are converting what was previously unsecured debt into secured debt. This could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. However, secured debt consolidation loans work for many people, so this is an option to consider carefully – the Bills.com Savings Center is a great resource to help you find a lender for this type of loan.
If you do not own a home or other property to offer as collateral for a secured debt consolidation loan, there are several other options you should
consider. You may be able to transfer your existing cards to another credit card with a lower APR, or one with a 0% introductory rate. A balance transfer could help you by consolidating all of your credit cards into a single account with a lower interest rate and lower monthly payment. You may want to explore
Free Credit Card Offers
Search for credit cards that meet your needs. A card such as the Discover Platinum, with a 0% APR for 12 months, and 10.99% thereafter, is certainly a good deal as far as credit cards go. Keep in mind that you will probably not be able to transfer your student loans to a credit card, so this option may not be right for you. You could also look into an unsecured personal loan to consolidate your debts–check out the loans section of the Bills.com Savings Center for unsecured debt consolidation loans that may improve your situation. However, since your credit history is less than perfect, you may have difficulty finding a lender willing to extend you credit, and if you do find a loan, you should expect to pay a premium in interest. In fact, a conventional unsecured debt consolidation loan, such as those I mention above, may be impractical and cost-prohibitive due to your credit problems.
A possible alternative loan resource you may want to explore is www.Prosper.com, a site which puts private lenders in contact with private borrowers. A private lender may be more willing extend you a loan than a traditional bank. If you are unable to find a consolidation
loan that fits your needs, you may want to look into alternatives such as debt settlement or credit counseling. Bills.com offers a wealth of information regarding the various debt help options available to consumers–visit http://www.bills.com/debthelp/ for more information.
Given that some of your debt is student loans, you may want to consolidate your student loans through a student loan lender, then consolidate or resolve your unsecured debt using on of the methods I mentioned above. Bills.com offers a wealth of information regarding student loan consolidation loans, available at http://www.bills.com/student-loan-consolidation-article/ .
Bills.com also offers a wealth of information about student loans, available at Student Loan Advice
Once you have consolidated your delinquent accounts, you can work to rebuild your credit by opening and carefully managing a few select credit accounts. Ideally, you should pay off the balance of your credit cards each month, but if that is not possible, at least make your minimum payments on time to help build your credit score. For more information about credit and ways to improve your credit score, I encourage you to visit the Bills.com Credit Resources page, available at http://www.bills.com/credit/
I hope we can help you find a solution to your debt troubles, and help you Find. Learn. Save.
Best of luck,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
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