How to reduce your debt when your credit is good (700+)
Debt consolidation and debt settlement are two completely different strategies used by individuals to reduce current debt payments, and they can be used separately or together.
How to reduce your debt when your credit is ok (580-699)
Debt consolidation means taking all outstanding debt you have at various interest rates, and moving it down to a lower interest rate. This saves you money each month. For example, if you had $10,000 in credit card debt at a 27.8% APR rate, you could pay $548 per month and have it paid off in two years. However, that will cost you $3,148 in interest payments. If you were able to move this loan to a 12.0% interest rate, you could save $1,850 in interest payments.
If you’ve had a few late payments, non-payments, or other negative items on your credit report, then you need to find a lender who will approve you, transfer cash quickly, and offer an interest rate you can afford. You need to know exactly what you’re paying, whether it’s origination fees, early termination fees, or monthly payments. Unfortunately, companies who offer loans to people with bad credit are the most likely to hide these fees.