Not only can too much debt impact your credit score, but they can also take their toll and dig you into a hole where making payments on things like loans and credit card bills can get to a point where it’s unmanageable.

In some situations, mainly when your credit score is good, looking at a debt consolidation loan can be an option that could slowly help you get from beneath a mountain of debt. For many, credit cards are a common reason for their debt. When you have a decent credit score, you can qualify for an unsecured personal loan that could have better interest rates than what your credit card companies charge and allow you to consolidate that debt and pay it off at a lower rate, potentially saving you a significant amount of money in the process.

Before you jump on board, you owe it to yourself to know a few things about personal loans and what to look for before you start applying. You want to understand things like potential fees, possible penalties for paying early, how interest works, and how to minimize the impact to your credit score when applying.

Debt Consolidation Loans using Equity in your House

If you have equity in a property a debt consolidation loan sounds like an option for your situation, before you start the application process you need to take a look at whether you meet the criteria and if you might be within the realm of qualifying. Some Non Conforming Lenders will allow you to consolidate debt with bad credit.

Start by getting your current credit score if you don’t already know it. Be sure to look at online lenders, and not just banks, since they often meet or beat what a bank might be able to offer much of the time. You should also look at your debt to income ratio, which isn’t necessarily part of your credit score, but it is something that lenders often look at. This helps them determine whether they think you might be capable of repaying a loan. Depending on the amount you’re thinking to request, it might need to be much lower. Your debt to income ratio is a comparison of your monthly debt payment to their monthly gross income, or incoming compared to outgoing, where debt is concerned.

While debt consolidation might not be an option for all, it’s an opportunity to explore for those that appear to be a good fit and serious about fixing their debt.