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When Should You Start Consolidating Your Debt?

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BestMoney Staff
Bestmoney Staff
Dec. 02, 20212 min read
Debt consolidation loans can be a great way to get yourself out of deep financial debt, but it's not the answer for everyone. How do you know if it's the right choice for you? Let's learn about when to consider using a debt consolidation loan to help you get rid of your debt.

When to Consider a Debt Consolidation Loan

Debt consolidation loans are a good solution for some people, but it’s not for everyone. You may want to consider this type of program if:

You’re tired of being in debt

The most obvious reason to consider a debt consolidation loan is if you are tired of being trapped under the weight of debt. Often, people can fall into debt through no fault of their own or because of responsible decisions that simply required more funding than they had at the time. Going to college, for example, is a costly venture that will land you in tens of thousands of dollars worth of debt. But nobody would call you irresponsible for taking out a student loan.

If this is your situation, i.e., you’re in debt but not because of frivolous spending habits, then taking out a debt consolidation loan or program is a good option for you. You’re ready to pay off your loan responsibly each month, you have the funds to make the monthly payments, and you aren’t going to use the debt-free status as an excuse to go on a wild and care-free shopping spree. You’re the ideal candidate for a debt consolidation loan.

You want to improve your credit score

Having less debt will significantly impact your credit score for the better. You can even boost your credit score by as much as 21 points just from taking out a debt consolidation loan.

You want to lower your interest payments

Sometimes, applying for a debt consolidation loan can lower your interest rate and overall loan payments. If the personal loan you get comes with a lower interest rate than the one you’re currently paying, then you’ll end up saving potentially thousands on your debt payments overall.

You want help with money management

A debt consolidation loan program is also a good idea if you are having a hard time juggling the various debt payments each month. Frequently, people fall further into debt simply because they can’t get their finances organized enough to make multiple payments required by multiple debtors each month. Having a single payment to make each month is significantly more manageable than juggling multiple payments.

Our Reccomended Debt Consolidation Loan Provider


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When Not to Consider a Debt Consolidation Loan

On the other hand, if you only have a minimal amount of debt that you are managing responsibly, a debt consolidation loan may not be necessary for you. It is also not a good idea if you don't intend to change your spending habits. Be honest with yourself. If you landed in debt because you frequently spent beyond your means AND you have no intention of changing your derelict ways, then a debt consolidation loan will do you more harm than good.

Finally, debt consolidation loan programs are not a good option for you if you are already paying the lowest interest rates you could possibly get. The beauty of taking out a personal loan is that you are likely to get a lower APR or interest rate for your loan. This will, in turn, save you money per month or overall. If you won’t get a lower rate, then there is not much benefit to taking out a debt consolidation loan.

Our Top Debt Consolidation Loan Company

If you've concluded that a debt consolidation loan is right for you, you might be wondering where to find reliable debt consolidation loans. It can be tough to narrow down the choices without doing a lot of leg work. Fortunately, we've done that for you. Here's our top debt consolidation loan company pick:


Freedom DR is one of the largest negotiators of debt in the US. The service works with a range of unsecured debt types, including credit card debt, personal loan debt, and medical bills. Freedom DR offers an initial consultation for free and an online dashboard to track your account status. The company also offers customer support 7 days a week.

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BestMoney Staff
Written byBestmoney Staff

Our editorial staff consists of writers who are knowledgeable about financial services. We specialize in simplifying the process of choosing the right provider for your needs.

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