How to Use a Personal Loan for Debt Consolidation Through Your Credit Union 

Personal loans could be a good way to cover both expected and unexpected costs. But did you know that personal loans could also be helpful in  consolidating your debt? 

Benefits of Using a Personal Loan to Consolidate Debt 

Personal loans could help consolidate higher-interest debts into  one lower interest rate  payment. 

For example, let’s say you have three different credit cards to pay off. You could use a personal loan to consolidate them all into one payment with a set due date and loan term, while enjoying an interest rate that could be lower than that of the average credit card. Over time, you could save money on monthly payments and may be able to pay off your debt faster. 

Can I do debt consolidation through a credit union? 

Of course! Credit unions, such as Service Credit Union, are all about helping their members improve their financial wellness. Getting a credit union personal loan for debt consolidation  could allow you to choose repayment terms that work for your budget. 

What do I need to do to take out a personal loan? 

If you are planning to apply for a personal loan for debt consolidation, you will need to provide that reason in your loan application.  You will also need to provide personal information such as your gross monthly income, employment status and monthly expenses to show that you have the ability to repay the loan. You may apply online , in a branch or over the phone. 

Do consolidation loans hurt your credit score? 

When you apply for a loan of any kind, lenders perform a “hard inquiry” on your credit report to evaluate your creditworthiness, which may cause a  drop in your credit score.  However responsible repayment behavior of your personal loan is an important factor in the calculation of your credit score.  Learn more about how credit scores are calculated. 

Is a personal loan for debt consolidation right for me? 

Before applying for a personal loan for debt consolidation, you should assess your financial situation. Make sure you’ve budgeted properly to be able to make your monthly payments and pay off your loan on time. If you do not have a steady source of income to pay off your loan, you may not be approved for one, or you may be adding even more debt to existing debt. 

However, when used properly, personal loans may be a great way to consolidate debt and pay it off faster. 

Ready to apply for a debt consolidation loan? Let Service Credit Union help.