Debt Consolidation Companies – Can They Rebuild Your Credit?

Many people suffer from a history of bad credit because of the habit of paying late. If you find yourself in a similar situation, perhaps you may consider debt consolidation as a solution for your problem. Today, let’s talk about how signing up debt consolidation can be of help in rebuilding bad credit history.

Organizing Your Debts Through Consolidation

Consolidating debts means combining different accounts into one account for easier payment. If you have multiple credit card debts or multiple loans, merging them into a single account has its advantages. What are these advantages?

When you consolidate, your debt consolidation company will pay off all your balances in one lump sum payment to stop your debts from accumulating. Since all your debts have been paid off, you will only need to pay your debt consolidation company. Hence, you can reduce your monthly payment and maintain only one rate of interest.

Another great benefit about consolidating debts is the freedom from creditors and debt collectors. If you have been dealing with aggressive creditors, you can instantly enjoy peace of mind and focus with your repayment obligations. Nevertheless, consolidating isn’t a one way ticket to being debt free but only the first towards freedom.

 

What Debt Consolidation Can’t Do

Some people may think that debt consolidation is a quick debt relief. But let’s not forget that you still have your duties with your debt consolidation company. And since a debt consolidation loan is often a secured loan, there is always the risk of losing the collateral you submitted if you default with your debts.

It is clear to see that debt consolidation requires effort and motivation on your part as a borrower. The repayment period for a debt consolidation is often much longer since it is a secured loan. That means despite the lower interest rate, the longer period of repayment would have you paying much more to your debt consolidation company than what you originally owe.

It is also crucial to stay out of new debts while in the middle of your debt consolidation payment. If you have credit cards, you need to be very careful not to incur balances in your account which could make it difficult for you to make payments. Keep in mind that incurring new debts outside the debts you’ve consolidated could put you in a far worse situation. Your priority should be to complete your debt consolidation loan as soon as you can.

Can your debt consolidation company help you rebuild bad credit? The answer to this question is left up to the borrower. Yes, successful consolidation would largely depend on how well you can handle your repayments with your loan.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

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