Consolidating debt and credit score

The FICO score requirements for the best rates at personal loan lenders can be steep.You might need a credit score over 760 to start seeing the lowest, single-digit interest rates.Here’s what you should consider before taking the plunge: Before you make a decision, you need to have a plan to pay off your debt.If you simply roll all your credit card balances into one big personal loan without having any idea how you’ll pay that debt off in the next five years, then you might as well not have bothered. Or will you find yourself struggling to pay it, and thus end up relying on your newly balance-free credit cards?

This makes it impossible for you to get stuck in the trap of making minimum payments all the time.In the last decade, personal loans have become much more common—for small projects, big but not huge purchases, and for debt consolidation.Taking out a personal loan to pay off high-interest credit card debt may sound like an easy and simple solution, but it shouldn’t be done lightly.Personal loans are good for people with moderate (but not severe) debt loads and a good credit score who are looking to simplify (or accelerate) their debt repayment.Personal loans will not solve spending problems, however, and they should not be pursued unless the borrower has already made serious steps toward cutting their spending and living within their means.

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