Frequently Asked Questions
Is debt consolidation a good idea?
Debt consolidation is a good idea when the consolidated interest rate is lower than your average current rate. It simplifies payments and can save money. However, it is not helpful if you continue accumulating new debt.
Does debt consolidation hurt your credit score?
Initially, applying for a consolidation loan causes a hard inquiry that may lower your score temporarily. However, consolidation typically helps your score long-term by reducing utilization and establishing consistent payments.
What interest rate can I get for a consolidation loan?
Rates depend on your credit score. Excellent credit (750+) may qualify for 6-10%. Good credit (670-749) typically sees 10-16%. Fair credit (580-669) may see 16-25%. Rates vary by lender and loan amount.
Should I close credit cards after consolidating?
Generally no. Closing cards reduces your total available credit, which can increase your utilization ratio and hurt your score. Keep cards open but avoid using them to prevent re-accumulating debt.
How long does debt consolidation take?
Getting approved for a consolidation loan takes 1-7 days. Most personal loans fund within a week. Balance transfers may take 1-3 weeks. The repayment period is typically 2-5 years depending on the loan term.