If you have outstanding credit card balances, student loans, auto payments and mortgages, you may be a candidate for loan consolidation.
After you receive your credit report, carefully check all the information for accuracy.One area you’ll want to pay close attention to is your accounts and payment history.It could throw off your repayment plan if the information is inaccurate.Avoid private consolidation loans for your federal student loans.Banks and private lenders sometimes try to get student loan borrowers to consolidate their federal student loans into a private consolidation loan (or to combine both federal and private student loans into a new, private consolidation loan) by promising “one low easy payment.” But consolidating your federal loans into a private loan is almost always a bad move.Consolidating your debts means your debts get transferred to a single lender.
In turn, you’ll only need to make a single monthly payment to the one lender.
The late payments will stay on your credit report for seven years.
On the other hand, rehabilitating your defaulted federal student loans, which is another way to get out of default, removes all mention of default from your credit report.
There is one huge downside in consolidating your loans, however.
If you haven’t solved the problems that put you into debt in the first place, you’ll end up off.
As you may imagine, if you have less-than-stellar credit, you may not qualify for these types of cards. This include the amounts owed, interest rate, monthly minimum payments, lender, and repayment period. You can get one free report from each of the three major consumer credit card bureaus—Trans Union, Equifax, and Experian within a 12-month period.