Repair Your Credit | Debt Consolidation (Pt. 4)

Taking stock of your debts

A key element of how you’ll “Repair Your Credit” is making mountains of debt more manageable. CLICK HERE if you missed the last installment of this article.

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Let’s face it. Managing debt can be a long, slow and tedious process. If you find yourself juggling numerous revolving credit accounts each month and relying upon online cash advance and installment loans to make ends meet, you need to find a different path through the woods. It could help you to use methods of debt consolidation. By doing so, you can put all your debt under one umbrella. At the very least, it’s likely you’ll save on interest rates each month, which makes a big difference in the long run.

When is it time to seek debt consolidation help?

Seeking help can be humbling for some and many find themselves embarrassed to seek out the appropriate help. But we’re living in a recession, we aren’t getting any younger – no Benjamin Buttons here – and we want to repair credit here. So if there’s any possibility that you could use help, take action and find it. The longer you wait, the more interest accumulates and the larger your debt pile becomes.

A good time to seek debt help is when you experience the following:

• You can only afford the minimum payments on your credit cards each month
• You’re taking on debt to pay for previous debt. An example would be using your credit card to make payments on other cards
• You write checks from one account to make a payment on another because you lack the money needed to keep up
• You are in or near “maxed out” city
• You’re working more hours or taking up part-time work in addition to your day job so that you can keep up
• You find yourself using credit for essentials like groceries and gas
• You have lost your job and don’t know how you’re going to make the minimum payments

If any of this applies to you, it’s time to take action. Begin thinking about what you can do to manage your debt before it gets out of control.

Credit card balance transfers

If your credit is at least fair (let’s say a FICO score of 660 or better), transferring the balance from a high interest card to a lower interest card might be an option. A key thing to look for here is a card that doesn’t bear an annual fee. Since there are so many banks and credit cards out there that are willing to compete for your business – recession or not – you’re bound to find a transfer option out there that has terms favorable to you. A zero percent interest rate for the life of transferred balances is ideal. Also look for a card that will allow you to transfer multiple balances, if necessary.

Home equity loans

This is the most popular form of debt consolidation, because a person’s home is generally the largest asset they possess. If you currently own a home with some equity left in it (I know, there are no guarantees of that in this economy), you can refinance the mortgage to pay off your debts and, if you’re lucky, you may even get a lower interest rate while you’re at it. Considering how low interest rates still are after the collapse of the American housing market, mortgage loan modification pays. Spread your payments out over thirty years. This gives you some immediate relief and ties all your debt into one payment with your mortgage.

CLICK HERE to see what else you can do…