(FinancialHealth.net) – Debt consolidation isn’t for everyone, but for some it can mean the difference between a credit score that only gets lower and slowly climbing to an excellent credit rating. Before you take on a debt consolidation loan or offer, consider some of the following details.
What is Your Hourly Worth?
Your hourly worth is important because debt consolidation loans and offers cost money. You can get a quote and figure up what the overall cost is to use a debt consolidation offer. Then, figure out how much time you would invest in managing your own debts. Multiply that time by your hourly rate and compare the costs. If it’s more cost-effective for you to use outside help to resolve your debts, then it’s worth it financially.
Be Realistic About the Timeline
Though you may not even want to think about it, bankruptcy may be an option to consider. When considering debt consolidation, try to estimate how long it would take to pay off the debts. If it’s longer than 10 years or it means using almost every penny you have available, bankruptcy may be a more financially sound choice for your situation. Bankruptcy can stay on your credit report for up to 10 years, so going beyond that with debt consolidation may not make sense if your goal is to rebuild your credit.
Use Your Resources
When interest rates are low, using your resources for debt consolidation can actually save you money. For instance, if you have enough equity in your home, you may be able to get a debt consolidation loan by redoing your mortgage. Depending on when you initially got your mortgage and how much your loan is, you may even have lower payments and a lower overall payoff because of the reduced interest.
~Here’s to Your Financial Health!
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