Whether you on are on the verge of bankruptcy of simply trying to manage your finances, you probably have bumped into tens of advertisements about debt consolidation and firms that promise to help you out. But is debt consolidation your option when you seem so overwhelmed by your credit debts? Read on this article to discover whether it is this right thing to consolidate all your loans. But first things first: what is consolidation?
Debt consolidation means having a single loan to pay off all other smaller loans so you have one installment every month instead of having to pay multiple loans, which can be really overwhelming and costly. The objective of loan consolidation is to minimize the loan interest rate, lower the monthly installment and reduce the number of lenders that you’ll have to deal with each time you fall behind your schedule. But debt consolidation is different from debt settlement in the sense that consolidation allows the borrower to pay his or her debt in full without any worry of negatively affecting the credit score.