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Debt Consolidation Can End The Emotional Rollercoaster

Being heavily in debt during these hard economic times can really add to a person’s stress levels. To end this rollercoaster of emotions I decided to look into debt consolidation. The one question I had at the beginning was how does debt consolidation work?

Depending on what type of debt you have there are several options when considering debt consolidation. The debt I wanted to consolidate was all from credit cards, which is the most common type of debt that people try to consolidate.

In my research I discovered that most debt consolidation programs actually have a negative effect on someone’s credit score at the beginning. After someone finishes a debt consolidation program their credit rating will go up, as long as they made all of the payments in their plan on time.

I was concerned about my credit score going down, because I am a college student that needed to be able to continue getting my student loans. What really worries me is that if I do not get my debt under control now, I am going to be in real trouble next year when I graduate and have to start paying for my student loans.

If I was a homeowner I could use the equity in the home to pay off my credit cards, but alas, I rent. I tried getting a hard money loan, but was turned down. As luck would have it my credit score was in reasonably good standing, so I got a simple personal loan.

Getting a personal loan for debt consolidation was not a quick fix to my problem. I still have to cut some of my monthly expenses to make ends meet. No matter how much I have to tighten my belt over the next couple of years one thing is for certain, paying 11% interest on a personal loan is much better that paying 26% or more interest on my credit cards.

The best part about getting a personal loan for debt consolidation is that it did not harm my credit score. In fact, once I pay off the personal loan I am guaranteed to see my credit rating go up.

Before anyone decides to seek debt consolidation they should remember that the best options available to them might require a bit of research to understand. The best advice I can give anyone looking into debt consolidation is to not jump into a plan that is not going to serve you well in the long run.