Consolidation loans have fixed interest rates that are based on the weighted average of the interest rates on the loans being consolidated.  The interest rate on a consolidation loan is the weighted average ofthe interest rates on the loans being consolidated, rounded up to thenearest 1/8 of a percent and capped at 8.  Repayment on a consolidation loan will begin within 60 days ofdisbursement of the loan, unless the borrower qualifies for andeferment or forbearance.  With a debt consolidation loan you will have to consolidate each of your high interest credit cards, as well as your consumer loans, into one inexpensive and affordable monthly payment with low interest.

If your minimum payments only pay for the interest accumulated that month, you should seek the help of a debt consolidation professional to help decrease your monthly payment while paying off more of your debt each month.  Debt consolidation program eliminates the portion of your total debt built up by accrued interest and other financial charges.  Consolidating your debts may mean it will take longer overall to become debt free, but in many situations it’s worth it if consolidation will improve your overall financial health.  The consolidation rate is fixed for the life of the loan, which protects you from future increases in variable rate loans but prevents you from benefiting from future decreases in variable rates.  Debt Consolidation will replace multiple loans with a single loan, often with a lower monthly payment and a longer repayment period.

Additional information on loan consolidation can be found on our main FSA site.

Credit Scoring

Credit scoring assesses your personal statistics, for example your age and occupation and each statistic is given a score.  Talk to a credit counselor to find out what it can do for you.  At the very least, you should pay the minimum payment on your credit accounts before the due date.  Just call your credit-card company and ask them to do it (many customer service people are authorized to reduce rates right there on the phone).  Our website is dedicated to helping you break free of your credit worries, and to get you back on track.