Bringing together all of your student loans into one big loan could be an excellent way to reduce your stress and manage your finances better. It’s easier to see one payment every month rather than several different payments which may or may not fall on the same day.
We will get into a bit of an overview about debt consolidation then provide some excellent options if you think debt consolidation will help you.
Debt consolidation loans allow you to pull together all of your loans into one big loan. The best-case scenario is that your new loan’s interest rate is lower than the interest rates on your other loans, which leads to potentially thousands saved over the life of the loan.
First and foremost, you’ll want to have a high credit score before shopping for a debt consolidation loan. This has the biggest impact on your interest rate, and the banks we’re including have at least a 580 credit score requirement.
When you go to your preferred lender, the requirements may differ. Most of them will first require that you provide several personal details and allow them to pull your credit report. Bear in mind this may cause a slight drop to your credit score, but it shouldn’t affect the rate they eventually give you.
Ideally, you’ll want a credit score in the mid-600 range at least as well as a debt-to-income ration of less than 45%.
When shopping for loans, you’ll want to look at the interest rates, origination fees, and the user interface you’ll be using on their website. While the companies themselves are high quality, it can help just that much more if the website is easy to navigate and they have a clear link to customer service.
Choosing the right debt consolidation loan can help relieve some of your financial stress and allow you to go about your day knowing you have things a bit more under control. The interest rates can be higher, but a high credit score could help you scoring an interest rate lower than what most credit cards are charging. Also, remember that, while applying for a loan and receiving an interest rate quote might ding your credit score, you have a window of time during which you can apply for several quotes without all of them affecting your credit score.