How Debt Consolidation Works How Your Credit Score Affects You Money Management Tips FAQ

How Debt Consolidation Works

When used effectively, debt consolidation can be an extremely beneficial tool for consumers who are becoming overburdened by their financial situation. Through a debt consolidation loan, consumers receive total debt help and are put in a position to gradually eliminate their debts all while establishing smart money-management skills. The process is relatively straightforward - consumers should remember that the decision to consolidate is theirs alone. Only enter a debt consolidation program after all your questions have been answered and you are sure it's the best course of action for you. Here's how it works:

  • Find a consolidation service: There are many ways to find a debt consolidator, but one of the smartest ways to go about it is by using an online service such as those found at TotalDebtHelp.com. Through this free service, consumers are personally matched with consolidators who may be able to meet their needs. Just provide basic information including how much debt you need to consolidate, your income and your basic contact information, and the service will get to work for you.
  • Review your matches and decide which programs are best for you: Depending on your information, you will be matched with respected consolidators who work in your area. Review the information they provide and decide which one (or ones) you'd like to work with. Remember that at this stage, you're only searching for information.
  • Process applications: Apply for consolidation loans with the consolidators you prefer. It's recommended to make more than one application; that way you'll have the benefit of multiple, competitive offers to review. Remember that several factors can impact which types of consolidation offers you receive. Your current income and debt, along with your credit rating, all can affect your status. Not all consolidation applications are approved, but there are many, many types of consolidation loans available for consumers with a variety of credit scores.
  • Review offers and ask questions: Review the loan proposals. Take into account factors such as proposed term, interest rates and monthly payment. If something is confusing, ask questions. Weigh the pros and cons of each proposal and consider how you will pay for this loan. Can you afford it? Could you afford more - and if so, are you permitted to make extra payments? Is the term within your comfort zone? Are there any penalties that you need to know more about?
  • Select your consolidation loan: Your consolidator will start the process of paying off your debts and consolidating them into one convenient loan. Continue to make payments until you are notified that the debts are satisfied; your consolidator will tell you when everything is complete and will provide you with your first consolidation loan due date.
  • Pay off your debt! Now that you have just one debt, you can manage it effectively and pay it down. Be sure to make payments on time, and practice smart money management techniques. This is the time to change your spending and saving habits for the better - make your debt consolidation loan the only debt relief you'll ever need.

Want to know more about debt consolidation? Read some of our frequently asked questions for some things you might have forgotten to think about.