Credit consolidation is a debt management plan that can help you to overcome debt. Credit consolidations,such as a consumer proposal can offer relief to individuals who have multiple credit accounts and loans. Consolidating your loans means that you only have to make one payment, usually with lower interest rates, so that the bulk of your payment goes towards settling any debt rather than paying for finance fees.
There are many benefits to proposals, and for the right candidate, it can even positively impact your credit score.
The right candidate for credit consolidation
Debt consolidation is recommended for individuals whose bulk repayments are in unsecured debts, such as personal loans, credit cards and collection accounts. But if your unmanageable payments are items such as child support or secured debts, for example, a debt consolidation loan may not be the best solution.
Another requirement for debt consolidation is your ability to make timely repayments for years, or the agreed upon duration for the reduced payments. If you foresee a situation where you will be unable to continue making your payments after several months, you should consider discussing a different debt management option.
How credit consolidation improves your credit score
If consulting with an Insolvency Trustee reveals that a credit consolidation will help make your financial situation more manageable, then you should know how it will impact your credit rating.
Once you have completed your debt consolidation, your credit history will show that you completed the payments. Moreover, your new repayment plan is constant, so you will have extra funds to put towards paying any new bills and planning for your future, which reflects positively on your credit rating.
While debt consolidation can improve your credit situation when it is completed, you must be fully committed to making timely payments. Contact a Licensed Insolvency Trustee today to discuss your options.