One of the main reasons why consolidation loans are frowned upon is that you may find yourself getting into debt for a longer period than needed, so it is important to weigh up all the alternatives you could take to reduce your debts or help pay off your existing ones.
A consolidation loan should not be the first action to take against debt, especially if there are expenses and outgoings you can reduce or get rid of completely. It is worth analysing your budget and looking at what you can afford to pay back on your current debts first.
Negative Effects of Consolidating Debt:
Depending on the actions that you take after debt consolidation, you can end up hurting your score. Missing a payment can bring your credit score down and it is important to keep up with your debt consolidation loan payments and any other credit payments that you are required to make, otherwise your score will drop.
Closing credit card accounts after you have consolidated the debt can negatively impact your score. Never close your oldest accounts because they will give you the longest credit history and you may also want to wait until the debt is paid off before closing accounts. If you close your accounts before paying off your debt it makes it look like you have “maxed out” and are therefore a high risk.
We will be able to offer advice on the suitability of debt consolidation to your specific financial situation, as there are instances where it would prove unsuitable. Our consultants will be able to help you with regards to secured and unsecured debt consolidation, and advice as to which would be most favorable to your outstanding debts. Operating on a national basis, we can also provide you with debt counseling or a debt review in South Africa. As mentioned, debt consolidation could save you on monthly payments and interest rates, which has made it a viable option for many. To find out if debt consolidation in South Africa is an option for you, contact Quick Consolidation Loans today.