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Tag Archive: credit score

  1. Credit card debt consolidation – what is good and bad about it

    Comments Off on Credit card debt consolidation – what is good and bad about it

  is safe to say that credit card debt is making a comeback in the United States. Different researches show that the average American household is carrying credit card debt of around $15,000. The average interest rate that many American households with credit card debt have to pay can quite possibly be more than $2000 over the course of the upcoming year if these families only make their minimum credit card debt payment. There is, however, a financial tool that can help you get out of your credit card debt in a faster manner.

    credit card debt consolidation

    credit card debt consolidation

    There is a method that is gaining real popularity among people carrying credit card debt and that method is called a credit card debt consolidation. Using a consolidation loan can set you on the right path towards debt relief and enable you to finally regain your financial stability. There are, however, many types of debt consolidation plans and programs. While some of them can really make the impact that you need, others can actually make things a bit worse. Below, we are going to look at:

    • Debt consolidation plans that actually work
    • Debt consolidation programs and plans that you should avoid
    • And the overall risks of consolidating credit card debts

    A credit card debt consolidation that can actually work


    A debt consolidation loan is basically all your debt being combined into a brand new, larger, debt consolidation loan. By repaying that new loan, you will be basically repaying all your multiple credit card debts, as the proceeds of the loan will go directly to all of your creditors. A debt consolidation loan can bring you three main benefits:

    • A debt consolidation loan is simpler and easier to track

    If you have multiple debts, that automatically means that each month you need to think and stress over a number of payments. That alone can be pretty hard and quite stressful. With a debt consolidation loan, you will be able to focus only on a single monthly payment which will ultimately make your budget planning a lot easier. And when you are going through tough financial times, repaying debt while also taking care of regular monthly bills, every feature that can make your life a bit easier is worth the consideration.

    • A new, lower interest rate

    This is probably the most important benefit that any loan feature can offer you. By lowering your overall interest rate, you will most likely be able to repay your overall debt years earlier and with that, you will naturally save a lot of money doing it. And since this is so important, you need to pay good attention to your debt consolidation loan terms, making sure that the annual percentage rate on your brand new debt consolidation loan is lower than the annual percentage rate on your current debts.

    • It can improve the state of your credit score

    improve the state of your credit score

    improve the state of your credit score

    In case you have your credit cards all maxed out, the utilization ratio of your credit cards is going to be really high. It is important to know that this utilization ratio may have a huge impact on your credit score, and not a positive one. When you are using a debt consolidation loan to pay off all your credit cards, you will actually be reducing the overall utilization on these credit cards. According to different research, people who are using debt consolidation loans to pay off their credit cards are having an improvement in their credits scores with around 20 points within just a few months after consolidating their debt into a credit card debt consolidation loan. Of course, the best and most certain way of improving the state of your credit score is to ultimately get rid of all the debt you are carrying.

    The consolidation loan can give you a lower interest rate

    • Lines of credit and home equity loans

    Before the financial crisis in 2008, home equity loans were one of the most used methods for consolidation. Home equity loans can give you several benefits. The two main benefits being an ability of an interest deduction and an overall lower loan interest rate. With that being said, however, going for a home equity loan can also be quite dangerous as you would have to put your house at risk. Normally, you can find pretty good rates on home equity loans from different credit unions, either a local credit union or a national credit union.

    • Personal loans

    Lines of credit & home equity loans

    Lines of credit & home equity loans

    With the lending industry seeing tremendous growth in the past decade, getting a personal loan with good terms, including low interest rate, is actually not that difficult nowadays. Most private loan lending companies will be willing to work with you regardless of the state of your credit score, so you should have plenty of options to choose from. Make sure that you do proper online research on different private loan lenders and compare the loan terms that they are offering. That way you will be able to pick the loan lending company that is best fitted for your financial situation.

    • A transfer of a credit card balance

    In order to gain new customers, many credit card companies are offering teaser interest rates that go as low as zero percent. If your credit score is good and you do not carry that much debt, transferring your credit card balance may work for you.

    Credit card debt consolidation plans and programs that you should stay away from

    Going for a home equity loan, a personal loan or a credit card balance transfer may be a really good option for you, especially if you have a perfect or at least a good credit score, and have a source of monthly income that enables you to easily manage your debt repayment while also managing your regular monthly bills. In case you are having a hard time paying your regular monthly bills and your credit score is not that good, you may be lured into using a debt management company. Keep in mind that in most cases, such companies often advertise themselves as companies that offer debt consolidation loans. The reality is quite different. What debt management companies do is that they make you pay them instead of paying your creditors.

  2. Consolidation Loans

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    If you are a regular costumer of banks and financial companies for loans (both secured and unsecured), if you have too many credit cards with growing balances and you are a frequent user of payday loans, it is highly likely that you may need credit management. Applying for consolidation loan could be a way to achieve that management.

    How consolidation loans work?

     Debt consolidation is often sought as a relief for bad financial caused by multiple loans

    Debt consolidation is often sought as a relief for bad financial caused by multiple loans

    Consolidation loans provide an option to get on top of your own finances and get rid of multiple liabilities running at the same time. The consolidation loan is not a new product, it is rediscovered in recent times by people having many outstanding debts. Debt consolidation is often sought as a relief for bad financial caused by multiple loans, high interest rates, different repayment conditions and all of those against one income.

    How to apply?

    Consolidation loans are usually easy to apply for. Some banks and other financial organizations offer certain relief programs if you are looking for a loan from them to cover your existing debts. For a start, it is best for you to put your obligations in order, meaning you should have an honest look at what you owe and under what terms and conditions.

    You should make a list of all your due payments on monthly basis, your interest rate for every credit product you use, full amount for repayment, the discounts for early pay off. You would now exactly know the amount of your new desired loan should be. Presenting accurate information on your liabilities would only help your new potential lender to prepare the most suitable offer for you.

    Your new terms and conditions matter

    Your new terms and conditions matter

    Your new terms and conditions matter

    The purpose of debt consolidation is to combine all the installments under all your credit into one monthly installment, now payable to your new lender. Rates often depend on your credit background check and you would be usually offered a longer period for repayment. You should be searching the best possible rates tailored to your specific situation.

    You should note that the cost for your lower monthly payment and longer payment plan (sometimes up to 5 years) is the increase of the overall period for you to be become a debt-free person. Moreover, the total cost you would be paying at the end would be a larger sum that you might have expected. Charges and fees that apply for this financial product should be also evaluated in advance to get a clear perspective as to what your new debt would look like.

    Consolidation loans options

    There are different options for consolidation, depending on what kinds of debts you intend to combine in one. If your liabilities consist of the usual credit cards, short term loans, payday loans, car loans and bad credit installment loans, you may qualify for the standard debt consolidation loans. Depending on the lender, conditions may vary, but one thing is a constant – the worse your credit score is (considering you have more bad credit installment loans or payday loans), the higher your interest rate would be and you are likely to be offered a longer period for the consolidation loan.

    Consolidation loans options

    Consolidation loans options

    If you have more than one student loan taken to finance your education, you may easily qualify for a direct consolidation loan. This is a different type of debt consolidation. This is a special debt consolidation loan designed to combine two or more federal education loans into one.

    This would allow the payment of one repayment installment per month. The debtor is released from charges and fees for application and utilization of the direct consolidation loan. It is important to note that private education debts are not considered eligible for direct consolidation. It is only intended to serve federal education loans.

    Before turning your student loans into one new loan, you should be aware that any benefits available under your old arrangements (discounts, rebates, special options) would be lost.

    Carefully review all the advantages and the disadvantages of consolidation. Because any sort of consolidation of your debts is just that – new structure, new term and new rates may apply, but it is still a debt.

    Banks are more reluctant to provide special conditions for consolidation loans but some financial unions developed special products to meet the needs of clients in greater debt. Direct consolidation loans are structured in a more favorable way than the simple ones.

    A serious commitment

    Consolidation loans represent a serious commitment. If your credit score is already poor or your income is uncertain and you have no collateral, consolidating your debts may only be a temporary rescue. That may turn into a threat, considering the sum you would have to repay would be more. It is advisable to revise your expenses and receivables, prioritize your liabilities and decide which obligations you need to address first.

    You should also have in mind that if your credit record is compromised, your options may be limited and you may find yourself offered not so preferable conditions. You should explore the possibilities with your new lender for re-negotiation of the consolidation debt, what prolong terms could be offered or what are the discounts should you repay in full prematurely.


"Thanks and I have enjoyed my association with you and your company. I would have never been able to do this on my own. Again, thanks for your help." Sandy P.

"My first student loan payment out of many loans was coming up and it was going to put a huge dent in my pocket. But luckily for me I found Apple Debt Care; they really helped me consolidate all my loans and now I only have to make one low payment that I can actually afford." - Eddy A.

"Thank you so much, I appreciate working with you and AppleDebtCare; You have already helped me so much and are continuing to help me get back on my feet and to manage my debt better." Demetrice M.