There are many benefits to getting rid of your debts. That is no secret. Having excess debt is a major stress and can lead to all kinds of unrelated fights with those you love, and make your life less pleasant. People have found success in eliminating debts through debt consolidation. While there are certainly more than three; here are three of the biggest benefits of consolidating debt.
One of the biggest caveats with long established debt is that you are often found to be “borrowing Peter to pay Paul.” That is you could max out a loan and get a credit card to pay that down. Then when your credit limit on your credit card is maxed out you could find yourself accepting and subsequently maxing out an overdraft line of credit. Now you have your bank involved (most overdraft lines of credit are attached to your checking account) so any money which comes into that account is known by your bank. You could even begin opening up multiple checking accounts so that you begin repeating the cycle! It’s a dangerous proposition but one which happens so often when you have piles of debt and no real way out of it. Rather than being slave to this cycle, working with a debt consolidation company can help you immensely. By taking away the multitude of creditors and instead presenting you with one check that you have to work into your monthly budget, debt consolidation allows you the freedom to pay down debt and otherwise get on with your life.
Lowered interest rate
Another not-too-secret discovery folks make right away when they work with a debt consolidation company is that they have far lowered interest rates. It may be staggering to see all your debts into one massive payment amount; but it’s far preferable to having to pay these variable and in some cases exorbitant interest rates to different creditors. Many debt consolidation companies can even get you on a fixed payment schedule. Just pay X-number of dollars on a certain day every month for a certain number of days and you are done!
Improve credit score
We don’t realize all the ways that a negative credit score impacts our lives, but it really does. When you have late payments, items in default or worse, collection, every month which goes by is impacting your credit score in a negative way. By working with a debt consolation company you are saying to the credit repair agencies that you are serious about setting your financial vessel aright. That’s good news for you and good news for your credit score. An impoverished credit score challenges you in being able to get a car loan, an apartment lease, and in some cases even a job! You don’t want to be denied housing, denied an auto loan, or even be denied employment because of old credit cards, right? Fix your low credit score and you can begin rebuilding your life.
Of course there are scores of other benefits to consolidating your debts. Most debt consolidation companies will offer you reduced fees or elimination of late charges. A substantial portion of your debts will also be forgiven in most cases. As a result you will be able to get out of debt faster. Debt consolation also frees you up from making new debts while you’re going through the program.
That’s when the true nugget of wisdom is bestowed upon you: you never needed what credit was getting you in the first place!