There are lots of debt consolidation options out there, how do you choose which is right for you? This article will help educate you so that you can make that decision for yourself. Each debt situation has a different way to tackle it, so it's impossible to tell you which road to take. What I can do is show you what your options for debt consolidation are and when they work, so you know which is the best one for you.

We'll start with when debt consolidation isn't a good idea. If none of your debts have defaulted and you can still make more than the monthly payment on most of them, you're not at the consolidation stage. If this is you, organize your monthly payments so that most of your money goes to paying the highest APR debt you have each month, while paying less on the lower APR debts. If you do need debt consolidation later, this will at least knock out your most expensive and fastest growing debts.

Credit Card Debt Consolidation Options

If your credit card debt is out of control, and you can't make the monthly payments or have already defaulted, you're a good candidate for debt consolidation. Your main options are whether you want to consolidate yourself, or hire a company to do it for you. Each method has its own benefits, but your current situation will determine which way to go.

DIY debt consolidation is the best choice when your credit score is still strong and you can be approved for a loan large enough to cover all of your credit card debt. The most common consolidation loans are secured loans that leverage the equity in your home to get you the loan, but you have to be a homeowner to get approved for this. If you aren't a homeowner, you're going to have a much harder time getting approved for a loan the size that you need. The best reason to do this yourself when you still have decent credit is that using a debt consolidator will remain on your credit report for years. This will prevent your score from rebounding as high as it could if you had done everything yourself.

Hiring a debt consolidation company is perfect when you have bad credit, especially when your credit score is so low it can only go up. You're going to get the biggest benefit from debt consolidation this way.

Loan Consolidation Options

If you're looking into loan consolidation, your choices are much more limited. It's going to be really hard to get approved for a loan to pay back all the other loans at the same time. A debt consolidator is a great choice if you're in this situation, bad credit or not.

The Best Debt Consolidation Options

The best debt consolidation option is the one that gets you out of debt the fastest while improving your credit score. If you're ready, willing, and able to do it on your own, this is always going to be the best way to do it. Unfortunately, most of us aren't in a situation that will allow us to do that, so we hire a debt consolidation company.

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