Debt Consolidation – When and How to Consolidate – Part II

Everybody knows: it’s easy to run up lots of debt if you’re not careful. We want to make sure that you know which steps to take to get out of debt and simplify your life. Last time, we offered tips on debt consolidation for folks who are credit challenged. Today, in Part II, we share some things to consider when thinking about debt consolidation for

those who have a stronger credit score and a strong, stable income history.

Regardless of your credit rating or income, Debt Consolidation offers a way to achieve one or more of the following goals: getting out of debt as soon as you can, significantly lowering your interest rate, reducing the number of creditors that you have to deal with every month or getting creditors off your back. You should prioritize these goals in the order from most important to lease important. In addition, be sure to check your credit report (for free, at before you take action and after you have completed any program to monitor and compare your status.

There are three things that you may want to consider as a strategy to consolidate your bills.

  1. Refinance your mortgage
  2. Transfer your balances
  3. Obtain an unsecured loan

Refinance Your Mortgage

If you own any real estate that has equity in it, then you may want to do a “cash out” refinance to pay off your existing debt for a lower interest rate with better managing terms. The amount you refinance may also qualify you for some possible tax reduction. A reputable mortgage loan officer and tax accountant can assist you in determining the specific benefits that will apply.


Transfer Your Balances

Transferring existing credit card balances is another great strategy to consolidate your debt if you are able to get lower interest rate without a bunch of associated fees. The key is to shop around and read the fine print. If you have a good credit score and a strong income history, you may be able to secure a new credit card with a much lower interest rate. As a word of caution, BEWARE. After the transfer, be sure to not run up the balances on your previous cards. As a suggestion, you may want to put them away where they can’t be easily used or just simply cut then in half and throw them away.


Obtain an Unsecured Loan

Unsecured loans such as “Signature Loans” are a great way to consolidate your debt and protect your credit along the way. It is the practice of securing a loan from a reputable lender to pay off the debt that you want to consolidate. Look for a loan with an interest rate that is lower than the rate of all of the individual bills you’re consolidating. It really does not make any sense to consolidate your bills unless you’re getting a lower interest rate. Signature Loans up to $20,000 are available at Mid-Illini Credit Union.

By using any of the above options, you can completely pay off the debts you owe your current creditors! The key is to shop around for the best service, interest rates and fees. At Mid-Illini Credit Union, we’re here to help you make the decision that’s right for you. For current rates and product information go to

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