Methods of Consolidation

Overwhelming debt can actually be hazardous to your health, as it is a known cause for stress. If you have multiple creditors with outstanding balances due and astronomical interest rates, consolidation may be ideal for you. Before considering a consolidation loan, however, thorough research is suggested. Also, try to negotiate as much of your debt as you possibly can without taking on another loan. If all else fails, there are several consumer credit agencies that can assist you with debt consolidation.

Know Your Debt

Gather all of your bills and gain a precise knowledge of how much debt you actually owe. Contact creditors and inquire about the current pay-off balances, as well as the outstanding balance owed.

Know Your Credit Rating

Contact all three credit bureau agencies --- Equifax, Esperian and TransUnion --- for a copy of your annual credit report. If you have not already received your annual copy, this should be free of charge to you, as you are allowed one free copy every year. While reviewing your credit rating, also note what your FICA credit score is. This will help you if you choose to pursue a consolidation loan from a reputable lender.

Contact Your Creditors

Before seeking a consolidation loan, try contacting your creditors directly to negotiate lower interest rates or even lower payments. Based on your history with the company, they may be willing to work with you, as many often do. If this is to no avail, then consider the possibility of a consolidation loan.

Find a Reputable Lender

If attaining a consolidation loan is the path that you ultimately choose, shop around first. There are several pseudo companies claiming to offer the best rates, but they are actually consumer rip-offs. Contact the Better Business Bureau to see if your chosen lender has a reputable and consumer-friendly reputation.

Once you have found a lender, you will be asked to provide a list of your debts and all financial information that is relevant to the consolidation process. It usually takes 24 to 48 hours for an approval. The lender will then combine all your monthly payments into one simplified payment, which you will pay directly to the new consolidating lender. The new lender will, in return, pay negotiated monthly payments --- at a lower rate --- to your other creditors.