Trying to pay off debt is a noble goal. But, if you’ve got multiple balances with multiple creditors, including some high-interest debt, it can feel like you have a mountain to climb that will take forever to be paid off.
When that’s the case, a debt consolidation loan may seem like a great option to lessen the interest rates and the number of payments you have to make every month. By transferring your various debt balances into a single loan, you can simplify the management of that debt and often get a lower interest rate. (To determine if you can lower your debt payments by consolidating, use LendingTree’s debt consolidation calculator.) Qualifying for a debt consolidation loan may be easier said than done.
If you have a giant mountain of debt, your credit score may also be less than stellar.
When debt consolidation is used as part of an overall commitment to reduce debt, it can be a key ingredient for improving your credit rating. But having a poor credit score makes it difficult to qualify for a new loan. Luckily, there are some alternatives that you may be able to pursue.