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We compiled everything you need to know about consolidating debts, and getting a debt consolidation loan, to help you decide if it’s right for you. It involves taking out a new loan or line of credit large enough to cover the debts that someone owes.Then, their outstanding debts are paid off and the person begins paying the new loan or line of credit, typically at a lower rate or with an easier payment schedule.Consolidation isn’t a silver bullet for debt problems.It doesn’t address excessive spending habits that create debt in the first place.Consolidating your debt is especially helpful if you struggle to keep track of your payments.If you’re considering a debt consolidation loan, try Fairstone’s free debt consolidation calculator.To do this, many or all of the products featured here are from our partners. It can reduce your total debt and reorganize it so you pay it off faster.
However, these two options involve risk — to your home or your retirement.Consolidating debt is a great way to get back on track with your finances and helps to rebuild credit. It’s just like a regular personal loan, but the money from that loan is used to pay off debt.Since all debts are being paid off, they are essentially combined or “consolidated” into the new loan.Our calculator shows how much you could save by paying off and consolidating multiple bills into one payment.The first step to obtaining a debt consolidation loan is to complete an application (you can do so here – it’s quick and won’t affect your credit score) to see if you qualify.