The Good, Bad, and Ugly on Debt Consolidation Loans

Making the choice to rectify debt problems is wonderful. But be aware that all debt consolidation loans are not made to help. There are even debt consolidation scams out there that can wipe out your bank account. You can strive to be debt free; you just have to be smart in doing it.

Many reputable banks and private institutions are available to give you a consolidation loan or a large line of credit to pay off debt. You can borrow against this and pay off high interest credit cards. The best thing to do is pay them off and discard them, or haggle with them for a lower interest rate.

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The problem however is that your credit rating must be high enough for approval. Many Americans these days are taking hits in their credit score because of the economy and poor spending habits. Some have had to live off credit cards to survive after losing their jobs.

If you are not sure if you would qualify for a loan but know your credit score check with them and ask. They should be able to tell you based on your score, because many loans are based on this large factor. Be aware if you apply several times to different bank institutions this will lower your score every time you run your credit.

A major thing you want to be cautious of in your time of need is falling for the countless emails and ads you see about getting a debt consolidation loan from a private lender for people with poor credit. Watch these very carefully as many of them are scams and can put you in worse financial distress. Many on of these get out debt loans have enormous ratings that seem like a quick solution but leave you paying off the loan longer thus spending more money. Try calling your current creditors and asking them about hardship programs or any other options they have. Most credit card companies will try to work with you because they want to be repaid.

Be very aware as well of scams out there that will rob you. Many times these scam artists will approve you very quickly and you see the light at the end of the tunnel. But unfortunately when you give them your personal information, such as your bank routing and account number, they rob you of all your money and clean you out. It is cruel and they are thieves so do not fall for this. Too many people have already and it is very sad that people would prey of others in desperate times but it does happen.

You might want to consider calling a third party who handles debt consolidation solutions. These companies can help you stop threatening phone calls and frustration by working with you and your debtors. They can speak to them and ease your stress. You can figure out a monthly amount you can afford to pay them and they pay your debtors for you. These companies have bargaining power where you may not.

So be smart about your choice in debt consolidation loans. Be aware that you may have limited options with a low credit score and don't fall prey to scam artists. Check to see what works best in your situation and be aware and proud of yourself for attempting to get out of debt.

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