Many people that have bad credit assume that the solution to their problems is to get a debt consolidation loan using the equity in their house. Now don’t get me wrong – it can solve problems, but can create brand new problems. What problems? Well too many people pay off their other debts (credit cards, etc..,) and then start using the “new credit” all over.

So how do you use a debt consolidation loan properly? The best way is to pay off all of the credit cards, but if you can’t pay off all of them, just pay off the highest interest cards first. Now is the hard part that most people don’t do – cancel all but one card with the best interest rate.

Now you’ve consolidated your credit cards using your debt consolidation loan…