Personal Debt ConsolidationWhen it comes to ensuring a debt-free future, you may have considered personal debt consolidation, but then shied away from the idea because of the bad things you heard about it. To give you a better feel for how personal debt consolidation works and why it can be an advantageous solution, here are a few myths about the process and why they are not true.

  1. Your Debt Will Only Increase. When you move forward with the personal debt consolidation process, it is highly unlikely that you will go further into debt, unless you do not manage your spending. When used properly, debt consolidation can help you simplify the process of paying off smaller loans to various lenders.
  2. Debt Consolidation Hurts Your Credit Score. Contrary to popular belief, personal debt consolidation may actually improve your credit score. This is because during the process, you take out a larger loan and pay off your existing smaller loans using the funds you acquired.
  3. You Need to Own a Home. Even though home equity can be used to consolidate debt, you do not have to own property to benefit from personal debt consolidation.
  4. You Have to Work with a Third Party. To consolidate your debts, all you need is, generally speaking, a larger loan that can cover the entire amount of all of your smaller loans. By only having one larger loan to deal with, you do not have to keep track of so many payments and interest rates on a continual basis. Instead, you will only have one loan with a fixed rate to manage.