For example, if you have six debts and they each want different amounts at various times of the month but on a monthly basis the total commitment adds up to 0.If you were to consolidate all the debts into one payment, it may be more convenient but what if the new loan cost you 0 per month, would it still seem an attractive proposition?
Consolidating debts may well be the answer to this issue because, by rationalising your many (smaller) debts and having one loan to manage, it stands that it would be easier to juggling your repayments and therefore there is less risk of you paying your debts late and thus decrease the likelihood of any adverse credit reporting.
Naturally, there are some consequences which also need to be considered when deciding whether or not to consolidate.
Nowadays, since the introduction of the new comprehensive credit reporting regime, potential credit providers can assess your loan application relying upon more detailed information about the way your manage your finances and your repayment history for the past 24 months.
This means that if you have a number of debts and you are finding it difficult to manage all the debt and consequently pay your bills late, this will more than likely affect your credit reputation and your ability to obtain a loan.
People also turn to debt consolidation loans as a way to address a debt problem.
This too can be an effective debt strategy, although there is one major risk associated with this that needs to be mentioned.
The new laws mean that potential credit providers now have access to more comprehensive information about your level of indebtedness and more specifically, the way you manage your debt.
Until now, credit providers could only see your personal details, credit infringement information and the amount of times you may have applied for credit (assuming that the credit provider made an enquiry).
At Debt Fix, we know everyone's situation is different and we understand that there is no “one size fits all” solution when it comes to managing debt.
For this reason, we present affordable options specifically tailored to suit your situation.
A person once said to me that when you’re in a hole and you want to get out of it, the first thing you should do is stop digging.