Living in Scarborough, while offering plenty of work, amenities and infrastructure, isn’t cheap. Having the highest housing prices in Alberta as well as a higher cost of living than most other communities, means one thing, debt.
So what can you do when you have credit card debt, public utilities, and loans, as well as regular living expenses, that just seem to keep coming? You may want to consider debt consolidation in Scarborough.
Five Steps to Debt Consolidation
Consolidating your debt isn’t an easy process, at least not if you want to get the best possible options that will lower your debt rather simply kicking the can down the road. Getting help from a credit counselling organization, preferably a non-profit one, will be a great help in doing this right.
1. Learn Your Credit Rating
Your credit rating is very important. It’s what creditors use to decide interest rates, if they will even give you a loan, and possible fees. Getting a credit report will also help you figure out what you owe and who you owe it to, providing you a nice list of all your important debt. This makes your life easier, as you don’t have to waste time going over individual bills trying to get everything organized.
2. Make a Debt Inventory
If you’ve gotten a credit report, this part is fairly easy. Make a list of everything you owe, this includes credit cards, bank and student loans, mortgages and debts. Decide which ones you want to consolidate, and then work out the interest rates, monthly payments, late fees, monthly fees, etc.
Take the debt that cost you the most interest and place them at the top of the list for consolidation, work your way down the list listing each one by priority. Depending on your monthly budget and your credit rating, you may not be able to get a large enough loan to cover all of your debt, so you should be ready to prioritize what gets paid off and what can wait.
It’s also important to know what can and can’t be consolidated. Mortgages and some loans cannot be part of your debt consolidation, so when you’re looking at your options be sure to ask what the loan will cover.
3. Look at Your Options
There are many options for debt consolidation in Scarborough, credit card companies, banks, online lenders and credit unions all offer low-rate personal loans, home equity loans, and even low-rate credit cards to help you consolidate your debt.
When looking at your options, be sure to ask the lender what their credit requirements are. Many lenders have a minimum credit score requirement before they’ll lend money to a person, or they’ll only offer a high-interest rate loan. When you’re consolidating your debt, you need a low-interest loan to make it worth your while. But don’t give up hope, a credit counsellor can give you advice on how to get a low-interest rate loan, and help you find the best option available.
Be careful of personal and online lenders, as many offer deals that look too good to be true, and while not outright scams they have so many hidden costs and fees, you will end up deeper in debt with absolutely nothing worthwhile to show for it.
4. Applying for a Loan
If you’ve kept up with your payments, and your credit rating is okay, this step should be fairly easy for you. Simply go to your top choice, double check everything to make sure it is the best option and apply for the loan. You should get an answer fairly quickly, especially if you have all your information in order.
If you’re turned down, ask them why, and make sure to write their answers down. You can then look over the reasons and your information, by yourself or with a credit counsellor, and see if you can improve things. One of the most common reasons to be turned down for a loan if your credit rating isn’t rock bottom, is too much debt. If this is the case for you, you can go back and explain the loan is for debt consolidation.
The worst thing you can do is to go from one institution to another looking for a loan without changing anything. Each time you’re declined is a hit to your credit rating, and if your credit rating is not that good to begin with that is the last thing you need.
Now, if your credit rating is holding you back, and no institution will accept you, you can go to a credit counselor and ask them for advice, if you haven’t done it yet. Non-profit credit counsellors will often be able to get you a better deal with lenders, as it shows you are serious about getting out of debt and improving your credit rating.
5. Debt Consolidation
Here is where all the work you did earlier pays off. Depending on the size of your debt, you may not have enough to pay off everything. This isn’t a problem, the important thing is to look over your list, and pay off the worst debt immediately. Work your way down the list, consolidating the debt with the highest interest rates, balances and back payments first, until you have the one main loan and a few small, easy to handle debts.
When dealing with debt, less is better. That’s why properly planned debt consolidation in Scarborough is an option for stopping rising debt and ever increasing interest rates. One or two payments a month at a low interest rate is far better then five or ten payments, each one with its own interest rate, fees and late fees. You should consult a credit counsellor to make sure you get the best deal, but by going slowly and carefully through the steps listed above, you should be able to get a good deal and start heading down the road to a debt free future.