The Different Between Credit Consolidation and Debt Settlement

Credit Consolidation or Debt Settlement?

Executive Summary By Adam Jasa

Credit Consolidation is to combine outstanding debts into one or several loans. A Credit Consolidation can be a good move but only if the new loan is at a lower interest rate than the individual debt items. I recommend that if you get approved for a consolidation loan to only accept if the interest rate is substantially lower than the loans you are consolidating. Remember, only consolidate for a lower interest rate and take all closing costs into consideration.

Debt Settlement is also known as Debt Reduction. Debt Settlement is different than Credit Consolidation because the goal is to reduce your principal debt amount. This is done through negotiating with your creditor to lower your debt amount based off your specific financial hardship. Debt Settlement is usually the fastest way to get rid of unsecured debt besides bankruptcy.

If you have decent credit, your payment history will be negatively affected which is enough to pull your credit score down into the “poor” range. Once the debt is paid off you can begin to rebuild your credit.

Please read another resources about How to Consolidate  Student Loans