How to Consolidate Your Bills Without Using a Debt Consolidation Company

Debt consolidation companies constantly advertise their services as a solution to a lot of debt. While the companies work with your creditors to get all of your bills rolled into one monthly payment, using a debt consolidation company not only closes any revolving accounts you have, but negatively impacts your credit rating. In many cases it's better to assess your own financial situation and consolidate your debt on your own. Not only will your credit rating survive the process, but you won't have to pay any fees for someone else doing the work. Determining Your Need for a Loan If you have a lot of debt you might want to consider getting a personal loan to pay off your bills. By using your loan money to pay your existing creditors you are essentially rolling all of your current debt into one loan, and one monthly payment. This option works well for people who have a lot of outstanding debt and a good credit rating. Using the loan protects your credit rating because it gives you the option of paying the smaller bills without doing a settlement and closing the account. It's also possible for those with bad credit to get a personal loan. Typically the loan amount is smaller and the company will require some sort of collateral, but it gives you the cash you need to call your creditors and settle your accounts. Also, as you pay back the loan you'll begin rebuilding your credit rating. Just make sure you make timely payments. Transferring Your Balances to a Credit Card A lot of major credit cards also offer the option to transfer balances, but you should only use a credit card if you get a good interest rate. If you decide to transfer all of your balances to one credit card, look for the offers that allow you to pay off your debt at 0% interest. These offers typically give you six months to a year to pay the balance in full before the interest is added. keep in mind, that you need to be able to pay the entire balance of the card during this time frame, otherwise the interest is added back to the date of the charge. Settling Your Outstanding Accounts You don't need a debt consolidation company to settle your accounts for you. All you need to do is call the creditor and tell them that you want to settle the amount you owe. Most creditors will remove some or all of the interest and consider the account "paid in full." Settling your accounts means you are paying a less than the full amount owed and closing the account. A settlement is best for people who already have a bad credit rating, because it will negatively impact your credit score. The good thing is, if you have bad credit already, settling your accounts will pay off your debt and allow you to begin rebuilding your credit rating. Deciding What to Do About Your Debt Everyone's situation is different. When you look at your financial situation as a whole, you need to determine whether or not you want to protect your credit rating. Depending on the amount of money you owe, it's possible that you can get yourself out of debt without hurting your credit. If your credit is already damaged, then determine how you can pay off your debt and begin rebuilding your credit.