Consolidating credit card debt into a loan
Your credit scores can take a hit if you use all or most of the available credit on your cards.
A personal loan balance is reported as installment debt, which is treated differently in credit scoring formulas than revolving debt such as credit cards.
Look for a site that offers educational tools such as a credit score simulator or guidance on how to build credit.
If you can’t qualify for a loan through a reputable lender, don’t head for a payday lender. For borrowers with good credit, a balance transfer credit card is an alternative to a debt consolidation loan.
You should get free debt advice before you consider taking out a secured debt consolidation loan, as they’ll not be right for everyone and you could just be storing up trouble or putting off the inevitable.
Before you choose a debt consolidation loan think about anything that might happen in the future which could stop you keeping up with repayments.
The amount of credit card debt you can transfer is typically up to ,000.
Knowing your credit profile before you apply can help set expectations.
Several personal finance websites, including Nerd Wallet, offer free access to your credit score and credit report.
The interest rate depends on your credit profile, and it usually doesn’t change during the life of the loan.
Debt consolidation is only one of several strategies for paying off debt.