There are three common ways to pay down multiple debts: Debt consolidation, snowball method and avalanche method. Here’s how each one works:

• Debt consolidation: Debt consolidation, also known as loan consolidation, rolls multiple debts into one new loan or line of credit. It can be easier to manage one payment vs. multiple bills. And when used correctly, it could help you pay off your debt quicker, with potentially less money going toward overall interest payments.
• Snowball method: With the snowball method, you pay off your debt with the smallest balance first and then move to the next smallest until all debts have been paid off. This approach focuses on achieving results at a faster pace to motivate you to keep going. But it may involve paying more overall interest.
• Avalanche method: With the avalanche method, you first pay off the debt with the highest interest rate and then move on to the debt with the second highest rate until all debts have been paid off. This approach focuses on saving money in overall interest. But it can take awhile to get results.
  Each approach has its pros and cons, so you’ll want to choose the one that works best for you. Remember: Getting rid of high debt takes hard work, willpower and determination. But it is doable!

These aren't your only options, though. We've rounded up some other debt repayment strategies to help you prioritize which one to pay first.

Each situation is unique. Once you apply for debt consolidation, our team will pull your credit to help you figure out what options may help you. A free Dupaco Money Makeover may be able to help you review your budget.

At Dupaco, we believe you’re more than a credit score. And your score is just one piece of the puzzle. Each situation is unique. So, we encourage you to apply, regardless of your credit score. We’ll follow up with you to review your application and talk about next steps.

Here are some potential benefits of consolidating your debts into one loan:

• Save on interest payments: A big benefit of debt consolidation is when you can save on interest costs. Depending on the amount of debt you have, you could be paying thousands of dollars in interest over the life of the loan. Moving that debt to a new loan or line of credit with a lower interest rate could translate into significant savings.
• Simplified payments: Managing your debt could be a lot easier with fewer monthly payments.
• Fixed payment timeline: You may have the opportunity for a fixed payment timeline. This can make it easier to budget and make long-term financial goals.

Debt consolidation may not be right for everyone. You may not always save money by going this route. Make sure you know what you’re paying now and what you’ll be paying after a consolidation. Here are some potential drawbacks to consider:

• May prolong your payments: Moving debt to a new loan may extend the term of your loan, keeping you in debt longer.
• Doesn’t change spending habits: Consolidating debt on its own won’t help someone who overspends or has a hard time managing money.

Debt consolidation can impact your credit, depending on how you manage your payments and other factors that make up your credit score.

On the plus side, it may be easier to stay on top of your bills with fewer monthly payments. And making your payments on time and in full can help show that you’re responsible with your loan, which may boost your credit score over time.

It’s important to make consistent, on-time payments on your consolidated debt. Late or missed payments can hurt your credit score, so it’s crucial to stick to your repayment plan.

Opening and closing accounts affect your credit score. Depending on the type of mortgage financing you apply for, your credit score could be considered when determining whether you’re eligible for a home loan. Always talk to your mortgage lender before taking out a new loan or making changes to an existing loan.

You can learn more about the homebuying process here. And you can learn more about what makes up your credit score here.