Consolidate Payment Settlement For Free

Debt consolidation and debt settlement are both forms of debt relief that may help you manage your debt, but they have very different functions. In general, debt consolidation reduces the number of creditors you owe, while debt settlement reduces the total debt you owe.

Debt consolidation combining multiple debt balances into one new loan is likely to raise your credit scores over the long term if you use it to pay off debt. But it's possible you'll see a decline in your credit scores at first. That can be OK, as long as you make payments on time and don't rack up more debt.

Consolidation means that your various debts, whether they are credit card bills or loan payments, are rolled into one monthly payment. If you have multiple credit card accounts or loans, consolidation may be a way to simplify or lower payments.

You may pay a higher rate Your debt consolidation loan could come at a higher rate than what you currently pay on your debts. This could happen for a variety of reasons, including your current credit score. Consumers consolidating debt get an interest rate based on their credit rating.

At a very basic level, debt settlement is useful for reducing the total amount of debt owed, while debt consolidation is useful for reducing the total number of creditors you owe. It is possible to receive secondary benefits through either strategy, particularly debt consolidation.

Debt consolidation 1 is one way to make paying off your debt more manageable. Instead of paying several minimum monthly payments on a number of bills, this repayment strategy involves getting a new loan to combine and cover your other loans or debts. You can then repay all of your debts with a single monthly payment.

4 drawbacks of debt consolidation It won't solve financial problems on its own. Consolidating debt does not guarantee that you won't go into debt again.There may be up-front costs. Some debt consolidation loans come with fees.You may pay a higher rate.Missing payments will set you back even further.