Vision Credit Education, Inc.

Debt consolidation can seem appealing when you are faced with multiple credit card and loan payments. However, getting a loan to consolidate debt may be a longshot if your credit has suffered. There are other options that can provide relief when the bank says “no.”

Why Not Get a Loan?

First of all, getting a consolidation loan could be helpful if you would qualify. However, the likelihood that most people will qualify for a reasonable rate loan when saddled with heavy debt is slim. Instead, you face interest rates of 16% or higher, which does little or nothing to improve the situation.

Home equity loans can make good sense if you have substantial equity, a reasonable credit score and most importantly, a secure stream of income. If any of these conditions are not met, a home equity loan or HELOC will not be a good option.

Keep in mind that consolidating your credit cards in a home equity loan can help you catch your breath, but it also can put you deeper in debt. Some studies report that up to 70% of consumers that cash out equity to pay off debt end up charging the cards back up in as little as 2 years.

Change your Repayment Strategies

If you have some discretionary income but feel you are not repaying debt fast enough, consider taking an aggressive repayment approach toward one of your credit cards. Choosing the highest interest rate card can make the most sense, but even starting with a low balance card can be good to eliminate your first debt account.

Making consecutive above minimum payments on the same credit card account can give you leverage to request lower interest rates. Attractive balance transfer offers can result, which can allow you to consolidate balances and save money on interest without opening new debt accounts.

Ask for Help

If you feel that you are going to have trouble getting out of debt on your own, consider speaking with an Accredited Financial Counselor. There may be additional strategies they can help you with to get out of debt on your own more easily.

They can help you determine how much money you have available in your budget, as well as discover new ways to create more flexibility within your budget. If your budget does not balance properly, then they may have other options available for you.

Many credit counseling organizations provide debt management programs that financially distressed cardholders may enroll in to get a few breaks from their creditors. Their relationships with creditors could mean lower interest rates, which translates into lower minimum payment requirements. This could provide much needed breathing room in your budget while helping you repay debt and improve your credit over time.

Remember that consolidation of debt does not necessarily improve your situation. You must consider the terms of any consolidation option to determine if your situation could benefit through the option.

For more information about various consolidation options, contact a trusted nonprofit credit counseling organization today. You just might get the relief you are looking for.