Debt consolidation can help you clear your debts, but consider these key factors

financialexpress.com:

We all have debts, but the situation gets slightly challenging when someone has multiple debts, and he fails to manage all of them as it is not always feasible to run several loans and keep a track of all payments without delay or default. That is why it makes sense to consolidate your debts and focus on just one single debt that can be managed and repaid on time.

One strategy that comes to help in these situation is debt consolidation. It refers to combining multiple debts into a single loan or repayment plan. This method aims to simplify the repayment process by merging various outstanding debts, such as credit card balances, personal loans, or other liabilities, into one manageable payment.

The new consolidated loan usually comes with a lower interest rate or longer repayment tenure, making it easier for individuals to handle their debt burden. Before opting for debt consolidation, however, consider these key factors:

One of the most important factors while consolidating your debts is to evaluate the total outstanding debt, including interest rates, repayment terms, and any penalties or fees associated with the existing loans or debts.

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Your credit score is very important as it influences your interest rate on loans and various other factors that can make your loan cheaper or expensive. Check your credit score as it impacts eligibility and interest rates for the consolidated loan. Higher credit scores often lead to better loan terms.

Understand how debt consolidation might impact your credit score. Consolidation can initially lower the score but may improve it over time with regular payments.

Adhil Shetty, CEO,