Save Your Credit By
Consolidating Debt

Lowest Interest Debt Consolidation
Too Many Debts May
Be Ruining Your Credit!

A large contributing factor to ruining your credit is when you have multiple forms of debt - this makes it so that multiple firms have negative reports about your credit going to the credit bureau. One of the first things you can do to help save your credit is to consolidate all of your debt into one central place.

Here are some reasons that having too many forms of debt hurts your credit:

1. More than one agency reporting negative credit reports at the same time.

2. Multiple interest rates means that some debts are at very high interest rates.

3. It's more difficult to keep track of who you owe what.

4. Paying many debts at the same time rather than just one main debt slows down the process of paying off your debts.

Low interest debt consolidation not only helps you improve your credit but it will also help you pay off your debt much sooner than otherwise.

1. Debt consolidation makes it so that you only have 1 payment to make rather than many payments.

2. Typically, consolidating your debt helps lead to you having lower interest rates - this decreases the amount you owe.

3. Most of the times if you are using a "debt consolidation" agency to help you consolidate your debt, they will negotiate on your behalf and decrease the total payment you have - they can actually decrease your overall debt for you.

You may feel that consolidating debt is a bad idea, many feel this way, however, if this means that you pay back your debt quicker and have less to pay off - 9 times out of 10 it's a good move with minimal risks.

The only scenario in which you do not want to consolidate your debt is if you are converting credit card, non-asset backed debt into an asset backed debt. For example, if you are taking your credit card debt and rolling it into your hoome loan - this is potentially a very risk move.

Sure, doing this means that you will almost definitely have a much lower interest rate and you can pay the debt off sooner. However, the risk is enormous if you end up defaulting on the loan - you could lose your house!

Let's just take a scenario in which you consolidate your debt into your home loan and then are not able to make the payments anymore.

If your debt is just a credit card debt, then the worst that can happen is that you are forced into bankruptcy. However, even in bankruptcy, your primary residence (home) cannot be touched!

But, if you have rolled that credit card debt into your home loan, now it becomes an asset-backed debt and you now owe your bank the money. The bank can at any time take over ownership over your home on reason for not paying the home loan.

So, yes you can save a lot of money but you need to weight that with the risk you run of losing your home completely. I always recommend that if you have any doubts as to whether you can make the payments, do not roll it into your home.

However, there are still many ways you can do a low interest debt consolidation without needing an asset to back it up. You should always try to consolidate your debt where it makes sense - it can save you thousands of dollars.

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