Down side to consolidating bills
If you are joint on a loan, know that some financial institutions only report information about the primary borrower, not any secondary borrowers or co-signers.
If you want to see what your credit history looks like, you can request it from Equifax or Trans Union for free. This means that if you ask a bank for a loan, on paper they will add your proposed loan to your existing debt payments (these are your payments on your existing loans, credit cards, line of credit or mortgage) to see if together they exceed 40% of your income (they call this measurement your Total Debt Service Ratio or TDSR).
Others apply for an unsecured loan from a finance company at 30% or higher.
But if you’re trying to reduce debt, odds are these routes won’t get you ahead very quickly since a large portion of your debt payment will go straight to the interest, and barely any to the principle.
When people begin to experience financial difficulty, they often look at debt consolidation loans as a way to solve their debt problems.
They do this in an effort to lower their interest rates and combine all of their payments into one manageable monthly payment. However, getting a debt consolidation loan isn’t as easy as many people think.
Your credit history shows how you use credit in Canada.
If you have problems making ends meet, contact your creditors or a legitimate non-profit agency that specializes in credit counseling services for assistance.
Do this as soon as possible to see how consolidated debt can help relieve the burden of financial stresses.
Financial institutions often ask for security or collateral when applying for a debt consolidation loan, especially when someone is having difficulty managing all of their payments.
They want to ensure that no matter what, they will get the money back that they have lent out.
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If you find yourself in a similar situation, here are five things you can do.