Consolidating credit card debt can definitely help a personal loan! To understand how, you will need to know more about personal loans.
If you are applying for one of these loans, lenders will look at your income, credit score, and ability to repay your loan. From a lender’s perspective, your credit card debt will likely impact two variables within the approval process; your credit score and your ability to repay the loan.
Your debt shows up on your credit reports and will impact your credit score. If your credit utilization is over 30% it can hurt your credit score, and multiple credit card balances on your report may not look the best.
By consolidating your credit card debt you can increase your credit utilization by freeing up multiple credit card balances. And when you consolidate your Credit card debt, you will often see a boost to your scores.
Another thing that debt consolidation helps with when taking out another loan, is managing your monthly payments. After consolidating debt, you’ll only have a single payment to worry about rather than multiple. And if you are thinking of adding a personal loan to your list of monthly bills, debt consolidation beforehand can ease the responsibility of remembering multiple due dates.
A good credit score is a huge factor when it comes to approval with a personal loan and it also impacts personal loan interest rates and repayments terms. Chances are the better your credit score, the better interest rate you will get, the higher loan amount you will be approved for, and the more flexible the repayment terms.
If you aren’t familiar with debt consolidation, it simply is the process of taking out one loan or credit card to pay off multiple debts, in this case, it would mean paying off your credit cards. Before choosing a credit card or loan for debt consolidation, it is important to look at the interest rate, repayment period, and the monthly payment. Because the last thing you will want to do is pay more on interest rates or have less manageability.