One of the main benefits of having an excellent credit score is that you can take advantage of lower interest rates available through debt consolidation loans. Debts under $5,000 can sometimes be paid through an unsecured personal loan through your bank or credit union. If you have built substantial equity in your home, then you can cash out that equity and use it to pay off those high interest credit cards.
This can be a good option for someone who has a lot of equity in their home and has an excellent credit score. Your good job security can allow you to handle the risks that come with securing unsecured credit card debt with your greatest asset, your home.
Once you have built up equity, then you have a couple of options:
A home equity loan can allow you to cash out your equity to use toward paying off your credit card debt. Instead of making several higher payments each month at multiple interest rates, you make just one consolidated payment in addition to your regular mortgage payment.
If you feel you are eligible for a lower interest rate on your existing mortgage loan, then you can refinance the loan. This change in terms may allow you to borrow more money which can be used to pay off the previous mortgage as well as your credit card debts.
The benefits may include a lower interest rate and potential tax savings. One drawback is that you are starting all over again to pay off your mortgage. It may be worth it if you can eliminate your credit card debt once and for all while taking advantage of a lower payment and lower interest rate.
If your equity is not enough, then you may want to try other options. A credit counselor may be able to discuss other options with you for free.
Debt consolidation loans generally require an excellent credit score in addition to a substantial amount of equity. If you do not have a great credit score, then you might want to consider credit counseling. Credit counselors may be able to help you to lower your interest rates and minimum payments on credit cards without getting a loan. If you would like to get a lower payment and reduced interest rates, get help from a credit counselor today.