Start Help with consolidating credit card debt

Help with consolidating credit card debt

While unsecured debt consolidation loans can be easier to obtain and more convenient than secured debt consolidation loans, they generally have higher interest rates, so they are more expensive to pay down than a secured debt consolidation loan.

If you’re facing bankruptcy, credit card debt is unsecured and typically discharged more easily than a home equity loan. Unsecured debt consolidation loans don’t require collateral, and they usually have easier approval requirements than secured debt consolidation loans.

Unsecured debt consolidation loans can have income requirements as low as $24,000 annually, debt-to-income ratios of up to 50 percent and minimum FICO credit scores as low as 600.

The primary difference between the two is that secured debt consolidation loans use collateral, while unsecured loans do not.

Unsecured loans are more common, but you can use a secured loan for unsecured debt, such as a home equity loan used for credit card debt consolidation. Secured debt consolidation loans are typically available at brick-and-mortar financial institutions, including banks and credit unions.

With very good or excellent credit (a FICO credit score of 740 or higher), you will be in a better position to qualify for the lowest interest rate offered by a lender. Your loan terms determine how much you will borrow and how long you will take to pay it back.

With a lower credit score, you are a higher risk and will be offered a higher interest rate. Typical loan amounts range from $1,000 to $50,000, depending on your creditworthiness.

Unsecured debt consolidation loans are offered online through banks and marketplace lenders.

This makes applying for a loan convenient, and some providers offer instant approval online, so you can find out right away if a loan is going to work for you.

“Make sure you have plenty of cushion in there so if something happens and you had to sell your home, or you had to move ...

you don’t end up losing your home.” Repayment terms can be 10 years or longer, and if the value of your home drops during that period, you may owe more than your home is worth.

However, a longer loan term means you may pay more interest total.