- 5 min read
- Define the goals you want credit debt consolidation to achieve.
- Review the different options available to consolidate debt.
- Examine how to interact with a firm and what to check out on your own.
Finding the Right Credit and Debt Consolidation Service
Are you struggling with credit and debt problems? If so, you're not alone. Millions of Americans' debts have grown at the same time that their income has fallen and the value of their homes dropped. At the same time, credit card issuers hiked interest rates on tens of millions of accounts, making it harder to pay off the debts consumers accumulated.
If you haven't been able to solve your debt problem on your own, look for professional credit and debt consolidation help. There are a variety of different programs, but the different programs share common goals: to get you out of debt faster and at a lower total cost.
Popular Credit and Debt Consolidation Goals
- Smaller monthly payment- If you can get a smaller monthly payment, you reduce your stress, because it is easier to meet your monthly obligations.
- Lower interest rates- If you can lower your interest rates, then more of your money goes to pay your debts, instead of profiting your creditors.
- Reduced total costs- A worthwhile goal is not only to lower your monthly costs, but to cut the total amount you pay to become debt free as much as possible.
Credit and Debt Consolidation Options
- Credit counseling- Credit counseling can help you become debt free in about 4½-5 years. A credit counseling program can lower your interest rates, so more of your monthly payment goes towards your principal balances. You make a single payment to the program and the program pays your different creditors. Your monthly program payment is often smaller than what you currently pay on your bills.
- Debt settlement- Debt settlement is different type of credit debt consolidation. You make one monthly payment to the settlement program that is deposited into a bank account that you control. As you build up the funds, they are used to pay your creditors less than you owe, in agreement to a settlement the debt settlement firm negotiates for you. Debt settlement can save you a lot of money, but at the cost of harming your credit. If your credit is already damaged, you may decide that any credit harm is worth the financial savings.
- Credit debt consolidation loans- You can save money, if you are able to combine all your debts into a new loan. If you can take out a loan that is secured by equity in your home, you can borrow at the lowest interest rates available. A cash-out refinance, however, requires good credit and sufficient stable income. Unsecured loans are also available to consolidate credit debt, but they often come with very high interest. If you don't own an asset or you don't qualify for a loan due to your credit or income, whether it is a loan that uses an asset can help you consolidate all your independent credit card accounts into one loan. These loans are either secured by collateral, such as your home or vehicle, or they unsecured, which does not attach collateral in the event you fail to pay as agreed but typically comes with much higher interest. Unsecured loans are one popular form of bad credit debt consolidation because you do not need a good credit score or any equity in your property to qualify.
Good Credit and Debt Consolidation Services
Whenever you seek professional assistance with a debt problem, it is important to find the right company to work with. Here are some tips, so you find a quality firm to work with, regardless of whether you are considering credit counseling, debt settlement, or a debt consolidation loan.
Interacting with a Firm
- Quality Free Consultation- No matter who you speak with, The people you speak with probably receive a commission if you choose to work with them, so they may rush you off the phone, if they can't help you. However, if you are eligible for their services, you should receive a free, in-depth consultation. No one should suggest you hire their firm, without a solid understanding of your income, debts, assets, credit concerns, and goals.
- Detailed Explanation- To figure out if a company is right for you, make sure you understand their fees, how long it takes to complete the program, and their overall success rate. If you are told that there are no negatives about working with a firm, don't trust what you hear. An honest presentation will include the good and bad.
- Patience- Don't work with anyone who is not patient with you. You should have an opportunity to ask all the questions you want to ask. If you have to ask the same question twice, to make sure you understand something, that's fine. Never leave a question unasked, because you don't want to bother the salesperson.
Things To Do On Your Own
- Comparison shop- You should compare different credit debt consolidation solutions as well as different companies that offer the same solution. Keep good notes, so you can compare the fees and other information you are given.
- Review Reputation- Find out how long a company has been operating. Does it have a history of satisfied customers? Compare the number of complaints you find about a company to its size. It's a bigger red-flag when a company that helps 1,000 people a year has 20 complaints (2%) than if a company that helps 10,000 has 50 complaints (.5%).
- Accreditation- Make sure that any firm you work with has the proper accreditation and license. Loan officers need to be licensed, for instance. Credit counseling firms should be members of either the the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC). The strongest accreditation in debt settlement comes from the American Fair Credit Council.
You can find good credit and debt consolidation services, if your debt problem is serious enough to require professional help. Don't be shy about seeking a free consultation, whether with a loan officer, a credit counselor, or a debt consultant. Don't rush into a decision. Take your time to find both the right credit debt consolidation solution and the right firm to work with.
Dealing with debt
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q3 2023 was $17.291 trillion. Housing debt totaled $12.489 trillion and non-housing debt was $4.802 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Kansas, 26% have any kind of debt in collections and the median debt in collections is $1652. Medical debt is common and 17% have that in collections. The median medical debt in collections is $849.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.