Everyone hits occasional financial snags in life. Going to college, buying a home, or having a child can hit a personal budget hard, sometimes setting back the finances several months or even years. When that happens, a person’s economic status can quickly spin out of control as one credit card after another gets maxxed out, building a mountain of debt that can be nearly impossible to dig out from under.

Unpaid monthly payments will damage a person’s credit history. Even though you may plan to make double payments the following month, the missed payment will show up as a negative, and may compromise your future ability to borrow money or extend your credit limit on existing accounts. That is why it is important to make every effort to pay your bills on time. Sometimes a creditor will let you make partial payments temporarily for extreme conditions, such as disability or unemployment. Still, you will have to find sources of funding that will help you make those credit card payments and either avoid a negative credit history or prevent your financial standing from damaging reports if the bills remain outstanding.

A debt consolidation loan may be the answer to your problem. Although a loan will not automatically reduce your debt load, it can provide smaller payment options that will ease your financial strain and help you stay current with monthly balances. A consolidation loan could provide several benefits toward paying off your credit card debt in a timely manner without defaulting and hurting your credit reputation.

1. Shop around with different lenders to see if you are eligible for a debt consolidation loan. The internet is an incredible resource for debt management and offers a wealth of information if you know where to look. One such resource is http://www.banklady.com. Potential lenders will consider several things to see if you can get a loan of this type, including the amount of debt you currently owe and the monthly payments that are due for each one, your household income, previous credit history, paid items that were financed—like a car or a boat, and your ability to make monthly payments for the proposed consolidation loan.

2. If it appears that you are eligible, you can submit an application for the debt consolidation loan. You may be able to do this from home at your computer. This would be helpful if you need to consult records and pay stubs rather than bring them all to the bank for copying. On the other hand, making an appointment with a loan officer to review some of the necessary records will give you the opportunity to ask questions and clarify information. Make sure the application is filled out correctly and completely, as missing information could delay an answer.

3. After discussing figures with the loan officer, make sure that you can afford the debt consolidation monthly payment. There’s no point in refinancing if the new payment will still be hard to meet. Try to get the due-date set to a day each month right around payday, so you can make the payment before spending that money on other things. Payroll withdrawals are another option that will automatically deduct the monthly payment from your paycheck before you ever get a chance to see or spend that amount. Ask your lender if this option is available, and if you use it, be sure to deduct the payment amount from your check register each month.

Should everyone in financial trouble take out a consolidation loan? Not necessarily. There are potential drawbacks to consider, so do your research before making the decision to apply for the loan.

1. How long will a debt consolidation loan extend your current balances? If your present credit card balances could be paid in full within three years by making regular payments as scheduled, is it advisable to refinance your debt and extend the loan another three to five years? You could end up paying far more over the life of the loan than you would by keeping current with regular debt payments. Compare the two to see if refinancing is in your best interests.

2. What will be your new interest rate? A debt consolidation loan generally is an unsecured loan, which means you may pay a higher interest rate than you might for a secured purchase, like a new car loan, for example. If your current credit card debt interest averages at six percent, and your new loan interest will be nine percent, how much more will you end up paying until the balances are paid in full?

3. Consider upcoming circumstances. For example, if your financial crunch is temporarily due to having a child in college, and he will graduate in a year, is there a way to make regular payments during this time by tightening the household budget rather than by refinancing a loan? You might be able to use your job’s year-end bonuses, an unexpected windfall, or a postponed vacation as a source of revenue to help you meet the present payment schedule, which could save money associated with the costs of a loan application, a longer payment scheduled, and higher interest.

These are some of the issues that typically come up when people think about refinancing their credit card debt to protect or clear their credit records. Give careful thought to the pros and cons of a debt consolidation loan before switching debt balances to a new lender.