[Quiz] Find Out If Debt Consolidation Is Right for You

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Written by: Amber Westover | Best Company Editorial Team

Last Updated: December 2nd, 2019

There are very specific circumstances under which you should consider debt consolidation: number of creditors and interest rates are just a few of those circumstances.

With so many different debt relief options, it can be hard to know which solution is right for you and your needs.

One available option is debt consolidation, which is the process of combining debt from multiple creditors into one lower monthly payment (often through a debt management plan or a personal loan).

Debt consolidation is beneficial because it typically results in lower interest rates and lower monthly payments.

Working with a debt consolidation company may help you take control of your debt. Take this quiz to find out if you are a good candidate for debt consolidation.

How Does Debt Consolidation Affect My Credit Score?

Debt consolidation doesn't affect your credit score nearly as much as debt settlement or bankruptcy. Though extremely effective, both debt settlement and bankruptcy will greatly reduce your credit score, making it nearly impossible to make future large purchases for the following few years. 

Debt consolidation is more suited to those who aren't yet being hassled by creditors, though there are exceptions. Because you are seeking to pay your debts instead of seeking a settlement, you are protecting your credit score. 

You can actually build your credit score through a debt consolidation loan if you make the payments on time. A debt consolidation loan will replace the entirety of your different accounts with creditors. This gives you just one easy monthly payment to make.

After your debts have been consolidated, a debt consolidation company will try to lower the respective interest rates with your creditors. One payment with one low-interest rate is easier than 5 payments with differing interest rates.

Is Debt Consolidation a Good Option?

Yes. But it completely depends on your financial situation. There are better options than debt consolidation, but only if you have the means to take them.

The rule of thumb for using debt consolidation is this: if you have multiple debts with high interest rates and are worried that you will soon be unable to make payments, you should consider debt consolidation.

As far as debt relief options go, you should consider them in the following order:

  1. Credit Counseling (if you have the financial means)
  2. Debt Consolidation (if you are running out of money)
  3. Debt Settlement (if you are out of money)
  4. Bankruptcy (only if a debt expert tells you to)

Credit counseling will work just fine for those who are confident that they will be able to get out of debt by themselves. 

But for those with a less fortunate financial situation, debt consolidation and debt settlement are great options.

What Are the Best Debt Consolidation Loans for Bad Credit?

Debt consolidation companies are judged according to customer reviews, their ability to consolidate debt and negotiate lower interest rates. Companies can generally provide estimates for pricing, additional fees, and post-consolidation interest rates.

Consolidated Credit

Consolidated Credit has helped over 5 million customers with debt. It is one of the largest credit counseling companies in the nation. Consolidated Credit does not disclose its projected interest rates after reduction but is upfront about pricing.

Average fees per month at Consolidated Credit are $0-69/Month. The company also has an upfront cost of $0-49. The company is highly rated on BestCompany.com.

DebtWave Credit Counseling

DebtWave Credit Counseling offers credit counseling and debt consolidation services. Many of the company's financial education resources are free and available online. 

The company claims to be able to reduce your interest rates down to one interest rate of 7.5 percent on average. DebtWave Credit Counseling costs $10-49/Month and has a one-time, setup fee of $50. 

Accredited Debt Consolidation

Accredited Debt Relief's debt consolidation program is designed to help customers achieve lower interest rates with their creditors. The company also provides debt management, bankruptcy counseling, and credit counseling services.

Customers can expect to pay between $10 and $40 per month. There is also an average upfront cost between $0 and $100.

The Top Debt Relief Companies

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#1 Freedom Debt Relief chevron_right
9.9 Overall Score
4.7
starstarstarstarstar_half
(13,472)
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#2 Consolidated Credit chevron_right
8.7 Overall Score
4.7
starstarstarstarstar_half
(732)
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#3 CreditAssociates chevron_right
8.5 Overall Score
4.5
starstarstarstarstar_half
(58)

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