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Debt Consolidation Guide by O1ne Mortgage

Are you struggling with multiple debts and looking for a way to simplify your repayment plan? Debt consolidation might be the solution you need. At O1ne Mortgage, we are here to help you navigate through the process and find the best options for your financial situation. Call us at 213-732-3074 for any mortgage service needs.

How Does Debt Consolidation Work?

Debt consolidation involves combining multiple debts into a single loan or credit card balance. This can simplify your repayment plan and potentially offer a lower interest rate, a more favorable repayment plan, and a shorter payoff timeline.

Balance Transfer Credit Card

A balance transfer credit card offers an introductory 0% annual percentage rate (APR) promotion, which can last up to 21 months. This allows you to pay down debt transferred from another credit card without paying any interest. However, these cards typically charge an upfront fee of 3% to 5% of the transfer amount.

Debt Consolidation Loan

A debt consolidation loan is a personal loan used to pay off credit cards, medical bills, and other types of debt. These loans offer a fixed repayment schedule, which can range from one to seven years. If you have good or excellent credit, you may qualify for a lower interest rate than what you’re currently paying.

Debt Consolidation vs. Debt Settlement

Debt settlement involves negotiating with creditors to pay less than what you owe, which can negatively impact your credit score. In contrast, debt consolidation can help improve your credit score if you make timely payments and avoid late fees.

What Credit Score Do You Need for Debt Consolidation?

Balance transfer credit cards typically require good credit, starting at a FICO® Score of 670. Personal loans are available to borrowers across the credit spectrum, but those with fair or poor credit may face higher interest rates and fees.

Does Debt Consolidation Hurt Your Credit?

Consolidating your debt can cause a slight temporary decrease in your credit score due to the hard inquiry made by the lender. However, as you pay down the balance, your credit score will likely improve.

Pros and Cons of Debt Consolidation

Pros

• Interest savings
• Repayment flexibility
• Easier to manage

Cons

• You may not qualify
• There may be upfront fees
• It could lead to more debt

Should You Consolidate Your Debt?

Debt consolidation can be beneficial if you have good or excellent credit and enough debt to save a significant amount in interest. Ensure you have a plan to avoid adding more debt and can afford the monthly payments.

Review Your Credit Before Applying for Debt Consolidation

Check your credit score and report to evaluate your options. This will help you pinpoint areas that need improvement before starting the consolidation process.

For personalized assistance and to explore your debt consolidation options, contact O1ne Mortgage at 213-732-3074. Our team of experts is ready to help you achieve financial stability.

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