Debt consolidation is the process of combining multiple debts into a single loan. There are many reasons why you should consolidate debt, including:
Say goodbye to multiple account fees and charges. Consolidating your debt means you have only one account to keep track of, one annual fee to pay and one repayment date you need to worry about.
By having one repayment you are more likely to remember the terms of the account as well as remember to make that repayment once a month, therefore avoiding late payment fees.
By negotiating your terms when consolidating, you may also be eligible for a reduced interest rate. When the time comes for consolidating debt, your financial situation may have changed, making you a more attractive candidate for a good interest rate.
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Debt consolidation involves taking out a new loan to pay off all current loans, reducing the number of repayments, owing balances and conditions you need to keep track of.
Keeping track of these details may affect your ability to budget and plan, and can also be incredibly stressful.
If you’re not one to keep on top of repayments, consolidating your debt may help to increase your credit score.
Late payments and defaults significantly affect your score, so by transferring all debt to a single account, you are more likely to make the repayment on time.
Over time, making timely repayments will help to rebuild your credit record.