Guidelines that determine whether a debt consolidation loan is a good debt relief option

thinking about debt relief optionsWith multiple loans to repay monthly, insufficient funds to repay the loans and confusion over due dates, it would seem like a brilliant idea to have all your debts consolidated into one loan that can be repaid monthly. Perfect solution, right? Wrong! Why? Because you won’t have researched about the debt consolidation plan offered and its suitability in your situation.

The following ideas will guide you in determining whether you need debt consolidation:

  • Types of debt consolidation loans and associated risk

The debt consolidation loans can be secured against your financial assets, giving the lender the chance to claim your assets if you default payments.

The other loan is the unsecured loan which the lender has no claim on your assets if you default payments. If your assets or home isn’t put at risk, then the best solution for you to manage your loans would be debt consolidation.

  • The amount of money you will pay back monthly

Debt consolidation is made easy by most debt consolidation firms offering lower monthly repayment rates. If the reason why you need to consolidate your loans is the inability to repay the current high monthly rates, then you may consider getting a consolidation plan from the best debt consolidation firm around you.

So, if you can keep up the rates offered after consolidation, then you may take up debt consolidation as an option. However, when your monthly interest payments go up, then you should reconsider the debt consolidation plan as it only means that you will repay more monthly.

  • If you wish to change your spending habits

If debt consolidation is the only way for you to minimize your spending and maybe even save more, then you should call number 1 debt consolidation company to help you out. It is important to make such a decision after thoroughly evaluating the risks involved.

For instance, a zero percent promotional credit card loan consolidating all your credit card balances and other loans works if you wish to stop spending haphazardly, and if you wish to repay all your debts within a specific duration.

  • If the lengthened repayment duration will not cost more

Extended repayment periods stand out as the catch behind consolidation. Most plans involve extending the time frame for repayment to reduce the monthly repayment rate. If this is the case with you, then how beneficial is consolidation? In such cases, you should reconsider your repayment plans.

  • Will you save any money?

This is what most people fail to ask when considering debt consolidation. This is because they think it as an impossibility. It isn’t. Debt consolidation reviews from the best companies show that you can save up money when repaying your loans within the same repayment periods, at a lower interest rate. This is what you should look out for. If your $10,000 dollar loan costs $3,000 dollars in interest and fees under consolidation when you are currently paying around $4,200 in interest and fees, then consolidation is appropriate.

  • How much is charged in fees and charges?

The terms and conditions set by some consolidation firms are really high and they will result in higher monthly repayments. These plans should be shunned.

Your financial consultant should also shed light into the headline interest rates known to cost more as arrangement fees.

In conclusion, the best repayment plan after debt consolidation must save you some money, reduce your monthly repayment rates, it mustn’t cost more in the future and your property or assets shouldn’t be at risk of being repossessed. You may also consider other strategies like cutting down on your spending; live within your means. If all the above concerns are favorable, then debt consolidation would be your best option.

4 Types of Debt Consolidation Loan Options

The year has just begun and you probably want to progress without any additional debt. Perhaps you wish to get a hold of your finances this year and cut down on spending. If this is so, then you should consider looking for a debt management system.

Besides there being a big number of credit management service providers, it would be prudent if you’d consider debt consolidation. This is a debt refinancing process that involves taking up a big loan to pay off small outstanding loans and debts. This has been shown to be an effective consumer debt management system and is therefore common in personal finance institutions.

Debt consolidation loans make debts manageable since you will be servicing one loan rather than multiple small loans and debts that can slip off your mind when due. Often, there are lower rates charged on the debt consolidation loan compared to the average rate on the multiple debts.

So, do you think that debt consolidation is your way out of a financial crisis? Do you know the most preferable or suitable debt consolidation process? Here are the 4 main types of debt consolidation processes:

  1. Consolidation through a debt consolidation company

Statistics show that there is an ever increasing amount of consumer debt. To help many people in need of debt relief or management solutions resolve or manage this, there has been a subsequent rise in the number of companies offering personal finance solutions.

One of the solutions or services provided by such companies is debt consolidation. You will easily come across firms exclusively offering debt consolidation. What happens is that you will receive advice on debt management alongside the loan. The company often pays off your creditors then you are left with one loan owed to the company. This gets your creditors off your neck for good, as long as you don’t accumulate any more debt.

The reasons why you should consider this option is because the resultant (new) loan charges lower monthly repayment since they’re charged lower interest rates. This option often saves money at the end of the repayment period.  If your biggest challenge has been forgetting to pay loans on time, the debt consolidation loan leaves you with only one loan that you can’t forget thus avoids default penalties and late fees associated with forgetting some payments.

Unfortunately, you will not enjoy the lower interest rates on your consolidated loan if your credit rating is poor.

  1. Balance transfer consolidation

Say you have several accumulated credit card debts; wouldn’t you want to transfer all those debts into one card with zero interest rate chargeable? The balance transfer consolidation option is an effective way to clear your credit card’s negative balances if you are certain that you will change your lifestyle and spending, and if you are certain that you will have repaid the debts fully by the end of the zero-interest rate period.

Most companies offering balance transfers on credit card balances give between 6 and 18 months. During this period, you should be able to repay the balances. This is an affordable option compared to normal repayment of a high interest credit card loan. You will, however, pay a transfer fee that is often between 2-5%.

  1. Home Equity Line of Equity Loan (HELOC) Consolidation

A debt consolidation loan is either secured or unsecured. HELOC consolidation is an example of a secured debt consolidation loan. In this case, your home will be used as collateral for the loan borrowed. This solution is effective because you can get a loan of up to 80% the value of your home.

Unfortunately, they do not have fixed terms since the value of your property is somewhat determined by the market. There is no control over external factors in finance. By securing the loan against your home, you will enjoy lower interest rates on the loan. Even though this rate will vary, it will be lower nonetheless. The other downside of HELOC consolidation is that you risk losing your home if you default payment.

  1. Peer to Peer (P2P) consolidation

This is one of the new debt consolidation processes. This is an option that allows people to lend money to each other through P2P lending companies. The P2P companies connect you with people with money they are willing to invest. The investor gains through the favorable interest rate that is charged on your debt consolidation loan. Besides the returns on investments and interest on the money lent, lenders also get satisfaction from helping people in need.

Compared to the loan you will get from the bank or any other financial or credit institutions, P2P loans charge lower interests.

The market is filled with all these options though caution is crucial when shopping for a debt consolidation loan. Some of the precautions you must exercise include:

  • Steering clear of scams

Avoid highly aggressive sales agents advertising deals that are too good to be true. You should also not sign contracts with companies that ask for any form of deposit for registration. Trust your gut instincts.

  • Work with reputable companies

Reputable companies have been in the market for a long time and they will offer the best advice. The chances of the company disappearing with your money are less and you can hold someone responsible. Look out for reviews, comments, and complaints on the company website and review sites to know if a company is trustworthy.

  • Get credit counseling

The reason why you are in debt is probably poor financial management. Do not get to the end of the year with more debt on your back. Create a budget and stick with it. Live within your means.

In conclusion, attaining financial freedom is a challenging but achievable vision. Talk to your finance planner and determine your best debt consolidation process. Change your lifestyle and learn to live without any debt on your back. You should also undertake sufficient research before signing contracts. Follow the advice above and your financial freedom goal will come true at the end of the year.

Recoup Your Finances by Availing Debt Consolidation Loan

It is not that you always need to be neck deep in loans to make you feel so much uncomfortable that you seek ways to get out from it. Even if the loan amount is not much of concern for you there is yet something very important that you want to protect. It is your credit rating that you can hardly allow to be dented. Modern lifestyle is highly dependent of debts for decent living. Debts have been wound around our lives and whether you like it or not, at some point in time you have to turn to it. Therefore, you know very well how good credit rating can make you a good candidate for getting loans. Hence, the need to protect it from getting tarnished, in case you happen to be defaulting with existing loans.

Issues with multiple creditors

Repaying capabilities are not always the reason why people fail to keep up with loan repayment schedules. Although it might be true for some people, most point to the troubles that they face in servicing several creditors. It is common nowadays that people use several credit cards and maintain several loan accounts concurrently. Each account has its own payment dates and consequently there could be several dates in a month when payments have to be made against the loans. This can become quite tasking for two reasons — firstly, remembering the dates is often difficult and secondly, keeping track of finances and allocating funds for timely payments needs close attention. Failed payments could directly affect credit scores that can further weaken the prospects of securing fresh loans.

Reasons for failure

On analyzing the situation that has been described above it will be easy to understand that the problem crops up from the number of creditors that have to be handled.  Each credit account has to be monitored individually to ensure that billings are correct because there are instances when some errors can creep in and add to your woes. Going through many bills every month at different times and matching with various payment dates are no less challenging. Moreover, funds have to be allocated to the accounts at the right time to effect payments. Taking everything together, it is a cumbersome task that can be quite stressful and even difficult to manage that often might lead to missed payments.

Looking for remedy

Considering the realities on the ground, it has to be accepted that you have to find out ways of living more comfortably with credits and managing debts in a smarter way. Although it would be ideal to seek a debt free life but it could be really hard to make it happen.  Rather, finding methods of coping with debts in a better way is a more practical way of tackling the problem.  There are three financial options that you can try out to resolve the problems faced with multiple creditors. All these are aimed consolidation of loans – dealing with a single loan account that replaces many. Read on to know about your options of consolidation.

Take personal loan

Taking out a personal loan can be thought about but it is far from practicable to make it work. Personal loans entail much higher rate of interest that could leave you paying more than what you have to pay now. The terms of payment may not also be favorable. It can affect your affordability and defeat the purpose of consolidation of loan accounts. Moreover, personal loans are given for smaller amount and the sum that it fetches might not be enough to pay back all other loans.

Line of credit against home equity

If you own a house, you can think about converting its equity value into a line of credit for obtaining some money to pay back other loans. While getting the amount you need is not a problem, the interest is also lower and the terms are also extended, it needs careful consideration to decide using this facility. The loan that you get is only for a portion of the home equity with the major part remaining unutilized. Since your home has the potential of bailing you out from much bigger financial crisis, exercising the options for credit consolidation may not be a wise decision.

Get a fresh loan specifically for consolidating debt

Loans are available for various purposes and are named according to it. There are home loans for home making, vehicle loans for buying cars and there is even a special category of loan for debt management which is known as debt consolidation loan. This is perhaps the most used option because it comes with some benefits that are just suited for the exercise. Unlike personal loans, this does not have any limits attached to it and can cover any amount of outstanding loans. It offers lower interest rates and favorable terms can also be negotiated. With the right attitude of using this option correctly to wipe out other loans, it is the perfect solution for consolidation that you have been looking.

Getting the best loan

In order to get the best loan for consolidating debts, there are some methods to follow.

  • Shop around – The money market is highly competitive and you should get a good bargain for the new loan that you will be taking. Do not be carried away by the face value of offers. Do a thorough analysis to understand what your benefits are and then shop around to get the best bargain.
  • Unsecured loan – Look for loans that are unsecured – that is available without asking for any collateral security.
  • Interest cost – While shopping around make sure that you get the lowest interest with favorable terms. This would help to save money through consolidation.
  • Costs and fees – Know about the costs that are associated with the loan – like closing costs that some companies charge. Also know about the fees to be paid, if any.

Conclusion –

Once you have identified the new lender, it is time to make use of the opportunity for not only consolidating the loans but using it to your advantage for recouping your finances.

Debt Consolidation and 9 Other Debt Repayment Strategies

Debt is a necessary evil for most people. Unfortunately, you will find that not everyone gets into debt by planning to take a loan and having a repayment plan. For most people, running into huge debts is a result of poor planning, financial misfortunes, and living beyond one’s means. For most of these cases, the problem recurs especially when the root cause of the problem isn’t identified and weeded out.

You may think that debt affects individuals and households only but the truth is that it affects businesses too. By spending too much on overheads while making poor investments, the company will most likely run into debt. Below are some of the debt management or repayment strategies:

  1. Creation of budgets

Everyone should know how to create a budget and if you don’t, then you should research online or even get a personal finance consultant or a credit counsellor who will guide you through the process of creating the budget.

There also are budgeting apps you can take advantage of and if you don’t fancy the apps, try out the traditional Excel spreadsheets. You will find that there are many miscellaneous expenses eating your income and savings resulting in debt.

  1. Deal with the high-interest debt first

The problem with a high-interest debt is that it puts your finances and your business into a high risk. These debts also take the biggest chunk off your income and can easily deplete your resources. If you have credit cards and one of them has a high interest repayment rate, you should pay it off before the rest because it increases your payment on the credit card with the highest APR. This will happen as you go on paying offthe debts with lower interest rates.

Student loans are often low interest debts that can be easily repaid once the high-interest credit card debts have been repaid. In some instances, it is allowed to transfer the student loan balances to the zero interest credit cards.

  1. Don’t brush off balance transfers

The most effective way of reducing your debt is by taking advantage of balance transfers. In most cases, the transfers are available for credit cards. Most credit card transfers are zero-interest rate transfers for balances and you can use this for the card with the highest interest rate on debt. You will be given a limited repayment duration during which the zero-interest rate is applicable. Take advantage of this to repay all your debts then.

  1. Always pay more than the minimum balance given

To reduce your debt significantly, always strive to pay more than what the minimum balance is on the monthly bank or credit card statements. When you do this, you get to prolong the payoff strategy. Whenever you can pay off the cost of the new office equipment with more than necessary monthly, do so. This strategy gets you out of debt faster.

  1. Debt consolidation

Is your company having many creditors to deal with monthly and is it becoming tougher to deal with all the debt monthly? Debt consolidation is a debt restructuring program that takes up all your current debts and repays them when you take up one loan to service. Instead of servicing many debts and dealing with several creditors sending you different invoices monthly, go for debt consolidation.

Fortunately, there are many debt consolidation firms around you with programs that suit you. With debt consolidation loans made easy, you can rely on the debt consolidation companies and credit counsellors for the best and the cheapest loans. You should however take your time researching on consolidation rates and fees. Don’t fall into scams and ensure that the company is certified and with verified positive reviews.

Debt consolidation is suitable for loans, mortgages, car loans, personal loans, student loans, outstanding bills, rates, taxes, etc.

  1. Debt settlement

Are you struggling to repay all your creditors who are out for blood? Perhaps you should take up debt settlement as a way to repay the owed amounts. Find a debt settlement company, talk to a credit counsellor, and determine how much you can save up monthly.

The debt settlement company will negotiate with your creditors and have them agree to a one-off payment of a percentage of the owed amount. You will contribute to an account set up by the debt consolidation company monthly.

  1. Cut down on spending

The cause of too much debt is unnecessary spending. To repay your debt and have a little extra money in your savings account monthly, you have to cut down your spending. Spending hurts your credit and your income significantly. Only buy what you need and avoid splash shopping. Stop carrying your credit cards around and save more. Practice frugality for financial freedom.

  1. Don’t waste your bonuses

Yes, you have earned the bonuses received, but when you have so much accumulated debt, it is important for you to consider using the earned work or project bonus on paying off debts. You may use the loan to pay off equipment debt, accrued leases, or even a student loan. Lump-sum payments attract discounts in most cases.

  1. Sell off unwanted items

Most of the things you buy are totally unnecessary. If you want to finish the year without any debt, spare the weekend and declutter. You will be amazed by the number of high-value but unnecessary items in your office or home. Auction these items online or have a garage sale. There are friends or acquaintances that may need the items, so sell them off and use the money to reduce your debt.

  1. Try micro-lenders and online lenders

If your business is in dire need of financing, but you have a poor credit history and score, you may consider micro lenders and online lenders. There are many legitimate lenders online or around you but you must research first.


In conclusion, there are many options for debt management but their effectiveness depends on your decisions and your willingness to stick to the programs. You should also change your habits, cut down spending and for a business, this might mean downsizing or allowing workers flexibility in working thus they can work from home and you won’t need a lease.

Student Debt Consolidation Facts that No One Told You About

If you have several student loans, you may already know that you can consolidate the loans into one loan. Here's how student loan consolidation works. You approach a willing bank, and the bank gives you a loan to pay off your student loans. After paying off your student loans, you are responsible for servicing the new larger bank loan.

In most cases, it’s relatively easy to consolidate all of your federal student loans as well as most private student loans. However, there are a few facts you should be aware of before rushing to consolidate your student loans. These facts will open your eyes to the downside and upside of consolidating student loans.

Consolidating your student’s loan is pretty much like refinancing your home. You get money to pay off your mortgage in full, but you will have to pay off the new loan. There are several advantages and disadvantages or home refinancing as many people found out in the home market crash of 2007. If people knew enough about home refinancing, maybe there wouldn’t have been so many foreclosures and incidences of families being kicked to the street. Benefits of Consolidating Your Student Loans

If you are a struggling grad in the current economy, you know how hard it is to land a well-paying job. You need a job that pays well so that you can comfortably pay off your student loans and keep up with your utilities and other financial responsibilities.

Since finding such a job may take you a while, consolidating your student loans is a really nice way to take some weight off your shoulders. In fact, for most students getting out of debt, consolidating student loans is the best option. Here are a few reasons why debt consolidation may be the right option for you.

  1. Lower Interest Rates

An obvious advantage and one that seems to draw the crowd in to consolidate their student loans is the lower interest rates. With a lower interest rate, you get to keep more money in your pocket than you had when you had multiple loans to repay.

You get to keep a whole lot more if your credit score is sound, or the interest rates have dropped since you took the student loans. The lower interest rates may help you repay the loan faster also.

Also, while checking your options to consolidation your student's loans, make sure you go for the fixed-rate interest plans. Most federal student loans are fixed-rate, but private lenders offer both variable and fixed-rate plans.

The variable rate plan may sound enticing since, on paper, you are paying anywhere between 2 to 3 percent interest, but they can go up in the blink of an eye. Signing up for a variable rate may set you up to rising rates for all the time you are paying for the student loan refinancing.

  1. Consolidation Lowers your Monthly Payments

A federal student loan repayment program takes anywhere between 5 to 20 years. Consolidating your student loans gives you a longer time period to repay the loan. With a longer repayment period, you end up paying less on your monthly repayments.

Extending the repayment period comes in handy when you are in a tough spot because it gives you a little breathing space to figure things out and securing a stable income.

The Downside Of Student Loan Consolidation

Like with everything else, consolidating student loans is not a one-size-fits-all option. There are a couple of things that go with it, and you should know the consequences of refinancing before you sign on the dotted line.

  1. Don’t Consolidate When You Are Almost Done

If you’re only a couple of thousand dollars short of clearing your student’s loan, or a couple of years from becoming debt free, refinancing your student loan may not do you any good. If you can make the payments without straining yourself, don’t consolidate your debts.

You don’t want to get stuck with another loan for another decade while you could have seen things through in the first place.

  1. Consolidating Your Student Loans May Cost You More

Taking another loan to pay off your student loans might be expensive in the long run. The interest charged on the consolidated loan may end up costing you more compared to paying off the loans on your own.

If you are capable of paying off your loans without overextending yourself, do it and don’t be tempted by easy methods of consolidation. Make sure you understand everything before signing on any documents that might tie you for the next two decades.

  1. You May Lose Standing With Your Lender

Some loans come with perks that allow you to save on the overall cost of paying back. Perks like principal rebates and interest rate discounts disappear when you consolidate your student loans. Be mindful of these perks when considering consolidating.

  1. You Forego Repayment Alternatives

Repayment options like grace periods and payment plans grounded on your income vanish when you consolidate. If you find yourself in a situation where you are not earning nearly as much as you would wish, but there is a chance of a raise, it’s worth checking these alternatives before consolidating.

Its true some consolidation options come with their alternative repayment plans, but not all of them offer lenient options. Make sure you go over these before signing on the dotted line. In fact, you can compare the alternatives to the federal repayment options to see if they are of value to you.

One final word about options to consolidation of your school debts

There are scams littered everywhere. Most of these scams are easy to single out because they offer too-good-to-be-true offers. It’s entirely okay to be attracted to these offers especially if you have financial difficulties. However, always walk away when a lender mentions things like processing fees or eliminating your debt entirely. If you are charged anything beforehand, you are likely being lured into a scam.

Debt Consolidation Made Easy: The Dos and Don’ts

If you are like most folks in the U.S, you are probably paying more than one loan. The Federal Reserve says that average household debt stands at $132,158 as of 2015. Average credit card debt is around $15,675 while mortgages, auto loans, student loans among others follow closely. The level of debt today is higher than it has ever been since the war and the situation is not getting any better. With a slow economy and global uncertainties, more people are expected to fall into debt.

is debt consolidation an optionIf you are repaying multiple debts today, you appreciate how hard this can get. You have to balance your income at a time when the cost of everything else is going up. This makes it easy to default and the consequences are grim. Credit card debts rate highly in the category of defaulted payments and this means a lot of people have bad credit profiles.

To manage your finances when paying multiple debts, debt consolidation comes in handy. The problem is that most people don’t know what this entails and many more have fallen for online scams. Most financial advisors recommended debt consolidation gives you a single repayment, which is easier to manage.

If you are struggling to handle multiple loans, it is time to understand the dos and don’ts of debt consolidation. Here you go:

The Dos of Debt Consolidation

While debt consolidation is a wise financial move, it is important to understand what you can do to get more out of the service. Here are a few tips:

Understand Debt Consolidation

When you start your online search for debt consolidation, you will come across many variations that providers still claim are the same. It is important to understand that debt consolidation involves taking a new unsecured loan to repay all the other debts you had. This means you will be making one single payment to your lender. This is different from debt settlement, debt relief and debt management.

Use a Reputable Debt Consolidation service

The internet has thousands of debt consolidation services and it can get tricky when you are looking for the best. However, you can use debt consolidation reviews to compare different services based on various parameters. These reviews compare the providers based on customer service, interest rates, registration and reliability. You should also check the BBB website for any complaints against a debt consolidation service you want to use.

Ask for Financial Advice

It is true that debt consolidation reduces monthly interest repayments, but does this apply to your case? Every loan is unique and a financial advisor from the loan provider has the expertise to help you understand how your repayments will be affected. Don’t just go for what the adverts tell you, but instead do the math or use a professional to help you understand the implications of the loan product you are buying.

Ask For Recommendations

If you have never used a debt consolidation service before, ask around for recommendations. There are many online scams that lure customers with debt consolidation promises only to start selling debt management or settlement. To avoid such, ask friends and family for recommendations. Remember the loan you buy will take time to pay and you need to use a professional company to avoid unethical collection methods.

Ask Questions

Before approaching any company, ensure you understand what debt consolidation is all about. There are many online resources which attempt to debt consolidation made easy and this is where you should start. Research about the different debt consolidation options and learn the pros and cons of each. When you start interviewing different lenders, ask as many questions as you can to guarantee you get the best service. The more information you have the better the choice you will make.

Check the Terms and Conditions

Most people sign loan contracts without actually reading what they are getting into. This leads to disagreements in future, which can be costly. To avoid this, read through the contract with your loan assistant and make sure you understand every item. For instance, make sure the repayment terms are clear, the penalties are well defined among other items.

 Assess your Finances

This should be the main consideration when you are thinking of debt consolidation. Will you be able to repay the single loan or will you default? Is it necessary to consolidate your debt and how much will you save? Such budgetary considerations will help you make the right decision.

The Don’ts of Debt Consolidation

Don’t Consider Debt Consideration as a final solution

Most people want a quick way out of debt and debt consolidation might seem like the panacea. However, you should understand that debt consolidation does not reduce your debt but rather helps you manage it better. You must remember that the original amount is still due and this calls for prudent financial management.

Don’t go for the Cheapest Service

There are thousands of debt consolidation services and they have enticing offers to lure customers. However, don’t always go for the cheapest services because they are not always the best.  You should check for the company’s track record and reputation before using their services. You should use top debt consolidation reviews to find the best service in terms of interest rates, reliability and customer service.

Don’t Rush

Just because you have seen an advert promising lower interest rates doesn’t mean you should jump at it. In fact, like any other financial decision, you need to take your time to avoid making a mistake. Take time to research about debt consolidation and check whether you are a good candidate for the service. You should also take more time to assess the benefits you will enjoy by using such services.

Debt consolidation is a prudent financial choice. If you are struggling with multiple debts at the moment, it is advisable to go for debt consolidation for lower interest rates and peace of mind. Managing a single payment is easier and you will find it less stressful to plan your income.

6 Debt Consolidation Options for your Bad Credit History

If you have a poor credit score, you do not need to approach your bank for a personal loan. Many people go for such conventional means and get turned down so fast. Having a low credit score does not mean that you won’t qualify for a loan anywhere. That is why other financial agencies have been formed to cater for this need.

Banks work with the risk-based pricing model, which makes it difficult to obtain a loan if you do not have an impressive credit score. Find out more details with #1 debt Consolidation Company on the options available for you. Read on to find other options that you can consider, including those that will not work for you!

Credit unions and banks

You stand a very low chance of getting a loan from these institutions if your credit score is not above 700. If by chance you are offered the loan, it will come with very high interest rates due to your poor credit history. This is why many people turn to friendlier options. It is not easy to come by a great credit history.

Loans with high interest are very expensive; since you will pay much more in the end even though the monthly payments will be low. This is why many people turn to debt consolidation companies.

Debt Consolidation Companies

Although debt consolidation companies are usually the perfect option for consumers with a bad credit history, you will need to be careful not to be tricked. Many fraudulent companies are out to extort people. Therefore, make sure you settle for an organization that is accredited by the government. You should also ask independent financial experts to confirm to you if the organization is legit. Do your research on debt consolidation reviews to find out what people are saying regarding the company.

With a debt consolidation lender, you will combine your different loans. The company will take over the conversation with your previous lenders, after which you will pay off the joint debt to the debt consolidation lender over time. This will be much simpler for you to manage your financial remittance after everything is joined. Another upside of this type of loan is that usually, the interest rates do not fluctuate. Your repayment value is therefore fixed within your repayment period, which is typically between 2 years to five years.

If the debt consolidation interest is too high for you, you can request for a co-signer. Most of the times, lending facilities accept co-signers to smoothen the loan repayment terms. This ushers us to the next point:


In co-signing, you as the lender will need someone to be the guarantor of your debt. The downside of this mode of repayment is if you skip a payment, your friend or family who has guaranteed you will be forced to pay for you. This mode has turned many relationships sour, hence you should really re-consider before taking this step. However, co-signing can significantly increase your chances of getting a loan with a low credit score, more so if you get a guarantor who is financially stronger and has a better credit score than you have.

Online Lenders

This can be another viable option for you, since many online lenders cater for those with a low credit score. However, they will still check your credit history to determine your interest rate. Your interest will definitely be higher if your credit score is low. You will pay an origination fee ranging from 1%-6% to start the loaning process. Some online lenders can offer you the option of co-signing, which can better the terms of agreement.

Payday Lending

This is the riskiest of them all. Payday, cash advance or no credit-check installments-all these terms mean the same thing: whereby you are given quick cash to repay in about two weeks. Remember, when the deal is too good think twice! This mode of getting a quick loan has the highest forms of interest rates ever that get up to 1,000%! That is utmost craziness! These lenders make big business from the desperate. If you are highly considering a payday loan, chances are you are debt sick!

One can get a longer repayment time with no credit-check installments, but be aware that you will pay up to 200% in interest rates. Save yourself from this madness and take up another option please!

Consumer Counseling Agencies

Many people choose consumer-counseling agencies thinking that their debt will not earn interest, since these agencies indicate that they are ‘non-profit’. The term non-profit only means that the agency does not pay tax from what they earn. Hence, your loan will still have interest. However, these agencies can offer you great financial aid since they can help you in a way other lenders do not. For instance, consumer-counseling agencies can approach your current lender and negotiate lower interest rates to decrease your debt. Hence, they offer a suitable Debt Management Plan for you.

Counseling agencies still work as usual debt consolidation companies. They help to consolidate your debt after which you will repay them as per the terms you sign up for. The consolidation company then distributes your repayment to your different creditors.

This may be the best option for you if you would like help to get out of debt. Your financial counselor from the agency can walk with you in your budgeting, and can take you through financial tips and resources to help you make better choices in financial management.


Although these are viable options to choose from, you should work on improving your credit score as a matter of priority so that you stop limiting your borrowing options. It is very worthwhile to have a good record in your files – you do not know what the future holds.

Significantly reduce your loan applications to stop appearing desperate in your records. Also, be very committed to your debts’ monthly repayments, and communicate in advance in the event of not being able to meet the requirements due to an honest, legitimate reason. It is possible to improve your credit history if you start making these steps today!

What Credit Score Do You Need To Get A Personal Loan?

You’ve found your personal finances are a bit, well, cramped. Maybe you've had an emergency like an automobile accident or serious illness or maybe it's just that your electric range quit working. You know that you could use your credit cards but if you got a personal loan you’d get the money at a much better interest rate. And that's true. Check your credit card interest rates and you could be paying 15%, 19% or even more. In comparison, you might get a personal, unsecured loan online from Lending Club at 9.4% or CircleBack Lending at 9.1%. Your bank or credit union might have personal loans at this rate or even better – depending on your credit score. And up jumps that old devil – your credit score.

Why your credit score is importantbad credit personal loans are difficult to get

Your credit score might not be the only thing that prospective lenders take into consideration but it will certainly be one of the most important. It will definitely govern your interest rate if you are able to get a loan. This is because that little three-digit number tells prospective lenders how trustworthy you are as a borrower or conversely how risky you are. It also represents a picture of your debts and repayment history.

Your credit score is a sort of snapshot of your credit report, which is a very detailed summary of how you handled credit over the years. You have three credit reports because there are three credit-reporting bureaus – TransUnion, Experian and Equifax.

How your credit score is calculated

Credit scores are based on a scoring system that was pioneered by a company called Fair Isaac Corporation and is now known just as FICO. Scores range from 350 to 800 and as you might guess the higher the number the better. In fact, if you have a high `number you should not only be able to qualify for a lower interest rate but also get a larger loan. A swing of just 50 points could affect your interest rate by several points. For example, one credit union reports that it offers unsecured personal loans at interest rates based on your credit score as follows.

  • Customers with 750+ scores receive a 10.99% APR
  • 700-749 scores receive a 11.99% APR
  • 660-699 scores receive a 12.99% APR
  • 620-659 scores receive a 15.99% APR
  • If your score is under 620, your rate will be 17.99% APR

As you can see from this list if your credit score were to drop 20 points from 702 680 your loan would cost you a full percentage point more. And if it were to drop below 660, it would cost you 4% more in interest.

Have you seen your credit reports recently?

Potential lenders are likely to consider your employment history and income in determining whether to give you a loan. Your credit report could be a deal breaker so it's important to get a copy of at least one of your reports and review it carefully before applying for a loan The biggest reason for this is there could be items on your report you're not aware of that are bringing down your credit rating. This could include unfavorable information from someone who has your same name or maybe you've been victimized by identity theft. When you review your report you also want to look for things that might send up a danger alert to potential lenders. This typically includes late payments, instances where you’ve gone 30% over your credit limit, have closed older credit cards or have only one source of credit. If you find too many of these items on your credit report it's likely that you will be turned down for the loan or will receive a very unfavorable interest rate.

Raising that credit score

You should also know your credit score. More and more of lenders are routinely including credit scores in their monthly statements. If yours aren’t doing this you can get your score free from websites such as CreditKarma and CreditSesame. You may also be able to get it free from one of the three credit reporting bureaus.woman looking for debt reduction

If you find your credit score is less than good, you might need to change your financial habits. Beyond this, it's important to correct any errors you find on your credit reports as this could quickly boost your score. You might also pay down outstanding debts as this would improve your credit utilization ratio, which makes up 30% of your credit score. Finally, you might set up automatic payments so you will always pay your bills online. Your bank may offer online banking that would make this very simple. If not, it's likely your creditors offer ways for you to pay your bills automatically.

In Debt To The IRS? Get A Fresh Start

Are you afraid to get your mail because you're scared you'll find yet another dunning letter from the IRS? Is it threatening to garnish your wages or put a lien on your house? It is scary to get in trouble with the IRS because it has so much power. You might feel as if you were David versus the Goliath that is the IRS and there you stand without even a slingshot. You may be waking up with the night sweats or maybe you can't sleep at all. Owing the IRS back taxes is one of the worst things that can happen to you financially and what’s even worse is that the problem will never go away – until you make the IRS happy. The harsh truth is that it holds all the cards because it has all the power. While it can't send you to debtor’s prison anymore it can make your life a living hell and maybe even take your home.

Get happy

There have been a number of songs dedicated to the idea of getting happy. In fact, there's a song from the 1950s titled “Get Happy” and more recently there was the Pharrell Williams’s song “Happy”. If you're in big time trouble with the IRS you might not think you'll ever be able to get happy. But there is good news. It’s because believe it or not the IRS actually wants to help you. In fact, it wants to give you a fresh start and yes, literally, a fresh start with a program of the same name.

What the IRS has said

The Internal Revenue Service has said through Commissioner Doug Shulman that, “This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years … It is part of our multiyear effort to help taxpayers who are struggling to make ends meet.” A simpler way to explain the Fresh Start program is that it's designed to make it easier for you to pay your back taxes and avoid tax liens. Here are the three most important parts of this program

1. Tax liens

First, the IRS has increased the amount that you owe before it will file a Notice of Federal Tax Lien. That amount is now $10,000 though in some cases you could get a tax lien notice if you owe less than $10,000. In addition, you might qualify to have your notice withdrawn if you are paying your tax debt through a Direct Debt Installment agreement.

2. Installment agreements

The Fresh Start program has now expanded access to and streamlined its installment agreements. If you owe up to $50,000 you can now repay your debt through monthly direct debt deposits for up to six years (72 months). You probably will not need a financial statement to take advantage of its Installment Agreement but you may need to provide some financial information. If you are interested in applying for a payment plan the IRS has an Online Payment Agreement available on There is also IRS Form 9465, Installment Agreement, which you could use to apply if you don't have access to the Internet.

Note: If you owe more than $50,000 and need more than six years to repay your debt, you will be required to provide the IRS with a financial statement.

3. Offers in Compromise

You could get caught up on your IRS tax debt through an Offer in Compromise (OIC). This is where you would be allowed to settle your tax debt for less than the full amount. Fresh Start has expanded this program so that the IRS now has added flexibility when analyzing your ability to pay. This makes the program available to more taxpayers. In general, it will accept an OIC if it believes that it cannot expect the full amount from you within a reasonable amount of time. However, the IRS will not accept an OIC if it believes you could pay the amount owed through a payment agreement or as a lump sum. Before approving an OIC the IRS will look at several different factors including your income and assets before making a decision regarding your ability to pay. has a tool called the Offer in Compromise Pre-Qualifier you could determine whether or not you might be eligible for an OIC.

In as few as two years

The changes that have made to the Offers in Compromise could help you resolve your tax problems in as few as two years compared to the four or five years in the past. These changes include:

  • The calculation for your future income has been revised
  • You are now allowed to repay your student loans
  • You are also allowed to pay delinquent state and local taxes
  • The Allowable Living Expense allowance category has been expanded. For example, you can now include as part of your allowable living expense things such as credit card payments and bank fees and charges.

Other things you need to know

There are some other important things you need to know about paying your back taxes. One is that you now may be able to get a short amount of additional time to pay your tax in full. You can request this through the Online Payment Agreement application at or by calling 1-800-829-1040.

Use a credit card

Second, you can now pay your tax bill by using a credit card. This could be a good deal if the interest rate on your card is lower than the interest and penalties you would be required by the Internal Revenue Code. If you think this idea might make sense, contact Link2Gov at 1-888-9PAY-TAX or

Online payment agreement

If you owe $25,000 or less in combined tax, interest and penalties you can ask for an installment agreement using the Online Payment Agreement application at

User fees

If you request an installment agreement and the IRS approves it, you will be charged a one-time user fee. If it’s a new agreement the fee will be $105 or $50 if you have the payments deducted directly from your bank account.

You don't need professional help

Finally, you may have heard those radio commercials offering to solve your tax problems for you. Some even refer to the Fresh Start program. You really don't need to go to any of those companies for help. You could go to site, review the information available and then determine if and how Fresh Start could help you. The IRS does want to give you a fresh start and it provides all the information you would need to take advantage of this program.

Solve that tax debt with a fresh start and sleep better nights. Go to, and learn all about the Fresh Start program and how you could use it to resolve your income tax problems. It could be a lot better than those night sweats.

Three And A Half Good Ways To Get Debt Relief And One Terribly Bad One

Are you having such a hard time with debt that you just can’t see anyway out and that the whole idea of debt relief seems like a joke? Well, it's not. There are ways that you can get relief from those debts – depending on how much trouble you're in.

1/2. If you have a reasonably good credit scorewoman needs debt solutions

We call this the one- half way to achieve debt relief because it's based on the fact that most of your debts are credit card debts and that you still have a reasonably good credit score. If this is the case you should be able to transfer the balances on your credit cards to a new one with either a very low interest rate or a 0% interest rate. If you could qualify for a 0% interest balance transfer card you'd not only consolidate your debts but would have anywhere from six to 18 months interest-free. This would give you time to get your balance paid down or even paid off, which would definitely provide debt relief.

1. If you own your own home and have some equity

If this is the case you should be able to get either a home equity loan or homeowner equity line of credit to pay off your outstanding debts. However, you'll need enough equity for the 80% rule, which is that you will be able to borrow only 80% of your equity. As an example of this if you have $20,000 in equity you'd be able to borrow only $16,000. However, there are several advantages to this beyond the fact that you would have consolidated your debts. For one thing you should have a lower monthly payment than the sum of the payments you’re currently making. And you will have much more time to pay off the loan. In fact, the typical term for a home equity loan is 30 years and for a homeowner equity line of credit 10 years. The downside of this is that because the loan has such a longer term you'll end up paying more interest

2. If you're willing to invest five years to get debt relief

A third way to get relief from those debts is by going to a consumer credit counseling agency and getting a debt management plan (DMP). If you choose this option you will be assigned a debt counselor and the two of you will work together to create a DMP designed around the payments you can actually afford to make. Your debt counselor will negotiate with your lenders to get any fees forgiven and for lower interest rates. If your lenders accept your DMP your debts will be consolidated in that you will now be required to make just one payment to the service agency each month. In return, it will pay each of your creditors monthly. Your credit card accounts will be closed and you will not be allowed to apply for or acquire any new debt until you complete your program, which as noted above will probably take five years. But at the end of those five years you will be debt free.

3. If you can make monthly payments for 2 to 4 years

The third or fourth option – depending on how you're counting – is to have your debts settled. When you hire a debt settlement company such as National Debt Relief you will end up paying only about 50% of what you owe. Your debt will be consolidated because you will now pay just the debt settlement company once a month instead of all your creditors. You may be able to choose from several different repayment programs but regardless of the one you choose it will take you anywhere from 24 to 48 months to complete your plan depending on how much you owe. Last but not least, the debt settlement company will take responsibility for interacting with your lenders and any debt collectors freeing you from those annoying calls.

4. The terribly bad option

The ultimate answer to debt relief is, of course, bankruptcy. Choose to do this and you might be debt-free in less than six months. However, do understand that not even bankruptcy will free you from secured debts like an auto loan or mortgage and certain types of unsecured debts. For example, a bankruptcy can’t discharge student loans, alimony, spousal support, family support and tax debts. Plus, it's a terribly bad option because of the stain it would leave in your credit reports for 10 years. A bankruptcy might drop your credit score by as many as 250 points making it very difficult for you to get new credit for two or even three years. Having a bankruptcy on your record would probably increase the cost of your insurance premiums and make it more difficult for you to rent a house or an apartment. Many employers now routinely check credit reports before hiring an employee so a bankruptcy in your credit history could even cost you a job.

Think before you leap

As you have seen there are options for getting debt relief. What's important is that you sit down, compare the alternatives and think things through before choosing one. Compare the pros and cons of each to make sure you choose the one that will fit you best. Depending on the one you choose you might have to live with it for anywhere from two to 30 years so be sure to think before you leap.