Credit cards can be a great tool for consumers. They allow you to make purchases you might not be able to afford in cash, many offer rewards programs and they let you build credit to get you a better rate when you need to borrow money for a car or a home.
If you aren’t careful, though, credit cards can also be harmful to your finances. After all, it’s easy to spend too much money with your credit card and end up in debt that can become overwhelming.
If you find yourself struggling to get out of credit card debt, however, the good news is that there are ways to get out of debt and programs that can help. But first, you’ll need to know if you qualify for these debt relief programs.
Are you in debt and need help? Look into your debt relief program options today.
How to qualify for debt relief
You have a few different options for debt relief, but it can help to determine whether you’re a good candidate before making a decision.
Debt consolidation loans
A debt consolidation loan makes it easier to pay what you owe by rolling multiple debts into one. With a debt consolidation loan, you essentially take out a lump-sum loan from a new lender and use that to pay off your existing loans. After that, you have one loan payment with one interest rate.
The qualifications for a debt consolidation loan vary by lender. Generally speaking, you’ll need a good credit score to get the best rates. You may still qualify for a debt consolidation loan if your credit score is lower, but the interest rate could be higher comparatively.
Some lenders may have a minimum amount of debt you have to have to qualify for a debt consolidation loan, and some may allow you to use a cosigner if your credit score is too low to qualify. Shop around until you find one that fits your needs.
Ready to get some debt relief? Find help here.
Debt management programs
A debt management program is when you work with a credit counselor to get out of debt. They will negotiate rates and help set up payment plans.
Again, each company will have requirements to qualify. That could include a minimum amount of debt, or there could be other requirements, like agreeing to close your credit cards so you don’t accrue more debt.
Debt settlement programs
A debt settlement program allows a debt relief specialist to negotiate with your creditors to lower the interest rates on your credit card or reduce the total amount you owe.
Each debt settlement company has unique requirements to qualify, including the amount of debt you must have to be eligible.
Home equity loan
You can also pay off your debt using a home equity loan. This works similarly to a debt consolidation loan, but instead of using a loan designed for debt repayment, you borrow from the equity you’ve built in your home. To qualify for this option, you’ll need to own your home and have at least 15% to 20% equity in the home, though it depends on your lender.
DIY options
There are also do-it-yourself options for getting out of debt. These include:
- The debt avalanche method: With this strategy, you make minimum payments on all debts except for the one with the highest interest rate. Any extra money goes toward paying off that debt. After that debt is paid off, you move on to the debt with the next-highest rate and continue until all debts are paid off.
- The debt snowball method: When following this method, focus on paying off the debt with the lowest balance first. Put as much money toward that debt while paying the minimum on your other debts. Once the smallest debt is paid off, you move on to the next smallest debt and continue until everything is paid off.
- Budget adjustments: You don’t have to use a specific strategy to get out of debt. You can just pay more on what you owe each month by cutting other costs. Some budget cuts to consider include entertainment and meals at restaurants.
The bottom line
There are a variety of debt relief options available to you, including structured programs and options to reduce debt on your own. When it comes to structured options, there may be requirements to meet, including a minimum credit score and a minimum or maximum amount of debt. Each lender or program will have its specific requirements to meet, so make sure you shop around and find the right fit for your needs.
