I met an old friend John last week at a school mate gathering. I have not seen John for the past five years after our last gathering.
John just been retrenched by his company beginning of year and without any income for the past 6 months. The only financial resources that John has are couple of credit cards and it has been burst. John cannot even remember how many bills have been outstanding. He has thought of seeking help on a bill consolidation exercise but did not know how to start.
Remember I did write about bill consolidation exercise before and the best option to turn to is resources from Internet, such as secureloanconsolidation.com. All these companies are very helpful and knowledgeable. Not only they advise you on the debts consolidation, they will also tailor made a complete package inclusive of refinancing, tax advice as well as bankruptcy procedure.
I hope John will take a bold move to face all this problems by engaging a professional company. Once the debts consolidation exercise is done, you will have a clear visibility of your debts and it is always easier to deal with a single debts account. Not only that, you might even get a lower interest rate in your new refinancing exercise, that means lower instalment and Interest payment.
Credit rating is very important as it determines how healthy our financial record is. Having a good rating will provide us channel to faster loan approval, higher loan amount and lower loan interest rate.
On the other hand, if you do not have a good credit rating, you will suffer from getting lower loan amount and paying higher interest rate.
So if you decided to go for debts consolidation exercise, how it will affect your future credit rating is very important.
If you are just consolidate all your loan into a single loan account for easy management or longer payment tenure, it will not affect your credit rating as you still settle the full amount of your outstanding loan.
If negotiating to reduce your debt is part of your debts consolidation plan, you may be penalized with a lower credit rating as you are not able to payback your debts fully. The financial institution force to accept your plan to recover part of the loan amount in return you will have to accept a bad credit score in your record.
However, the damage is not as severe as bankruptcy. As long as you can maintain a good payment record in 3 to 5 years, you will be able to regain your good credit rating status in the future.
Almost everyone has some form of loan with you, be it personal, auto loan, credit card, study loan, home loan etc. When you income is secured and come in on time, you should not have any problem, paying these monthly installment.
When your income shrink and your debts getting out of control, you start delay and default your monthly payment, at any one point you might not even know what your total loan amount is and what is your total monthly installment.
This is when you need to consolidate your debts, to have a better control over your debts. The simplest scenario of a debt consolidation is to get a single loan with larger loan amount to cover all others small loan. With this you will only need to deal with a single loan account in the future.
What is the benefit of Debt Consolidation?
1) Better control of your debts – You only need to look into a single loan account and pay only one monthly installment.
2) Better Interest Rate – Since the single loan amount is larger, you will enjoy lower interest rate.
3) Lower monthly payment – Usually, the loan tenure will be longer so that your monthly payment will be reduced to help you to lessen your financial burden.
4) Release tension – The lower monthly installment will release your tension temporary and get out of debts with better planning.
