Debt consolidating finance uk
Getting out of debt isn’t quick or easy, but it’s the first step to achieving lasting financial health. It simply means you’re taking out one loan to pay off a bunch of loans—or consolidating the debt to one payment.
It’s typically considered for people who have high consumer debt.
Truth: Debt consolidation is dangerous because it only treats the symptom.
Debt consolidation is nothing more than a con because you think you're starting with a clean slate.
But the truth is the debt is still there, as are the habits that caused it—you just moved it!
You can’t borrow your way out of debt in the same way you can’t get out of a hole by digging out the bottom.
This means you no longer owe money to multiple lenders.
In other words, the good money habits for staying out of debt and building wealth aren’t there—their behavior hasn’t changed—so it’s extremely likely they will go right back into debt.
Debt consolidation seems appealing because, in most cases, there’s a lower interest rate on parts of the debt, and it usually includes a lower payment.
If you keep your monthly repayments the same or increase them, you may be debt-free sooner – but this depends on the interest rate attached to your debt consolidation loan.
Providing you make your repayments on time and in full each month – as you should with any type of borrowing – a debt consolidation loan will not affect your credit score.