Consolidation Credit Counseling

Debt can put a strain on your finances and make it difficult for you to manage your money; but making one payment every month, instead of several, can make money management much easier. Both a debt consolidation loan and credit counseling can accomplish this. Choosing one of these options can be difficult, since each has its own benefits and drawbacks. Learn how consolidation credit counseling can benefit you most by submitting a form today.

Debt Consolidation versus Credit Counseling

Credit Eligibility
Anyone can enter credit counseling, no matter what their credit score is. This is because credit counseling works by managing your current bills and negotiating with you current lenders, not taking out a whole new loan. On the other hand, you have to have a good enough credit score to qualify for a debt consolidation loan. This is because you will be taking out a whole new loan and using the money to pay off your current debt. You will pay off your old lenders and start paying a new lender.

Interest Rate
Both credit counseling and a debt consolidation loan give you a shot at a better interest rate. With a debt consolidation loan, you run the risk of getting a higher interest rate than you already have, if your credit is worse than it was when you took out your current loans. With credit counseling, the agency can try to negotiate with your lenders for a better interest rate, but your rate should not go up any higher than it was when you entered credit counseling.

Property Risks
You can choose to take out a secured debt consolidation loan or an unsecured debt consolidation loan; but, with a secured loan, you run the risk of losing your property if you default. Usually a secured debt consolidation loan will be secured with your home. This means foreclosure if you default. With credit counseling, there is no risk of losing your property.

Rules to Follow
With credit counseling, you have to follow the rules of the program in order to stay in. If they want you to take money management classes, you have to take them. If you are late with your payments, they may drop you from the program. When you sign up for credit counseling, you are basically agreeing to follow their rules and requirements. With debt consolidation, there are no rules to follow. You pay your payments, if you are late you pay a fee and if you default the loan goes into collections.

As you can see, there are many differences between credit counseling and getting a debt consolidation loan. Only you can decide which option is right for your situation.