San Diego, CA (PRWEB) August 04, 2013
LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. A recently posted article on the website continues to offer the best advice by answering the question “Are debt consolidation loans bad for your credit?”
The article first explains: “If you’re carrying a lot of debt, that probably means you’re also carrying a lot of stress: Maybe you’ve amassed so much debt that each month, you find yourself performing a juggling act just to try to cover all the amounts due, and a simple trip to the mailbox pushes your nerves to the limit. Or maybe you’re still able to handle your debt but you realize that it’s having a significant impact on your debt-to-income ratio and your ability to get a mortgage or qualify for other loans or credit. In any case, taking a debt consolidation loan to pay off those debts can be a great option. Debt consolidation loan companies use the loan proceeds to pay off your existing debts, allowing you to pay one loan at a specific interest rate each month instead of trying to meet multiple obligations all month long. Often, consolidation loans offer better rates than many other types of consumer debts, meaning you can save money.”
The main drawback to using debt consolidation loans as debt settlement is that once consumers pay off their credit cards they are often tempted to use them again because of the $0 balance. This can lead them to rack up and even higher debt than they originally had before they applied for the loan. Their credit will suffer further damage and it will be even harder to recover from the slip back in to debt. The key in these situations is to not use the credit cards again once they are paid off. If the borrower does not think that they will have the willpower to avoid amassing more debt in this way, then these types of debt settlement loans are likely not a good option.
For those who do feel that that can avoid falling back into debt in this way, the Loan Love article gives a few tips on what to consider when comparing different loan consolidation companies:
- “Look for a company that’s been around and has received positive reviews from other clients (don’t be scared off by a few bad reviews; even top companies sometimes fail to meet people’s expectations).
- Check the Better Business Bureau for complaints and/or awards.
- Make sure the company has educational materials like articles or an informational blog so you can educate yourself about credit, budgeting and how to avoid debt.
- Like any loan, debt loans can have a wide range of interest rates, monthly payments, penalties and other fees, so be sure to compare loan terms carefully to get the best deal.”
For those who use them wisely, debt consolidation loans are some of the most powerful tools to reduce debt and get a person’s credit back on track. The Loan Love article ends with this advice: “For best results, avoid using your cards once they’re paid off and be sure to CAREFULLY READ any loan documents before signing.”
For more information, visit LoanLove.com for the full debt consolidation loan guide.