Is consolidating debt bad for your credit

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Most retirement plans allow you to borrow against them, but there are some drawbacks to consolidating with a 401k loan.

For starters, the loan has to be repaid in five years or it will be considered an early withdrawal and will be subject to a penalty and income tax.

Understand the risks associated with your debt consolidation method.

You can consolidate debt by combining your debt payments and pay off your debt quicker.If you fall behind on your payments, you face foreclosure, which is much worse than defaulting on your credit card payments.Debt consolidation loans are used solely to combine all your debts.You can transfer just one or two of your highest interest rate credit card balances to ease some of the debt pain.Before you consolidate debt with a balance transfer, make sure you’ll actually be saving money with the transfer.

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