If you find it difficult to pay off your monthly bills and are falling behind chances are you’re trying to get out of your current situation. Debt consolidation loans for bad credit profiles are probably one of the answers you’re looking for to stay afloat. In fact, a bad credit consolidation loan is probably the first way out when your credit is getting worse.
You may be wondering whether a bad risk person like you can find a lender who would give you a loan. Ironically, there are more lenders that would want to compete for your business than you may realize.
So your issue is to decide whether a debt consolidation loan is the right option to pay off debt. For that purpose, you may want to have a look at your options first before you go to consolidation lending companies.
Unsecured and Secured Debt Consolidation Loans for Bad Credit
There are many methods to pay off debts, which depend on how much money you owe to your creditors. There is a consolidation loan that may work for you if you have less than $7,500 debts. Alternatively, you might opt for a debt management plan (DMP) or a debt settlement program (DSP) if you have to pay off more than $10,000 unsecured bills.
A consolidation loan with a lower interest rate than the rate of your credit card and other bills is a good option for you to consider. To make it works, make sure the debt consolidation loan really reduce your total costs and not just lower your monthly payments.
When you have bad credit things can get more complicated and this is what might happen to you. First, it’s harder for you to qualify for an unsecured loan. Even if you can qualify for a loan with no collateral the amount may not be able to cover a large credit card debt.
Then, you’re probably trying to find out whether you can qualify for a secured loan. If you own a house with a significant equity you might qualify for a loan. However, converting unsecured loans to a secured loan is usually not a good idea because the risks don’t justify the benefits you can get from the loan.
In a situation where debt consolidation loans for bad credit don’t work for you just don’t stop because you still have other options.
Lenders That Offer Debt Consolidation Loans for Bad Credit
Getting a consolidation loan from conventional lending institutions like banks or credit unions are almost impossible if you have less-than-perfect credit. Those creditors are very picky and tend to cater only people with good to excellent credit.
Fortunately, there are lending services that specialize in giving a loan to consolidate debt. The debt consolidation lenders are willing to offer you a loan because they know how to work with people who have bad to average credit score and are struggling with their debts as well. Just be ready, the rates and terms of the consolidation loan may vary depending on your credit score.
Consolidation lending brokers like LendingTree are another good place to get a consolidation loan. These brokerage services maintain huge network of consolidation lenders. Using their software you can check interest rates, terms and other charges before agreeing to a loan and a lender. A reputable lending broker can help you get a better deal than if you were approaching different lenders directly.
Debt Consolidation Programs Vs Debt Consolidation Loans for Bad Credit
People often associate the debt consolidation term with a loan to consolidate debts. Wikipedia even define this: “Debt consolidation entails taking out one loan to pay off many others.” Credit card balance transfer is a good example. You can get a 0 APR credit card and transfer your high-interest credit card balances to lower interest costs.
But you can also consolidate debt with a debt consolidation program known as a debt management plan and another one with a slightly different debt relief approach called a debt settlement plan.
This means even with a bad credit history you still have options. You can reduce your monthly bill payments with a debt consolidation loan, a debt management plan or debt settlement program. Make sure you compare all options and go with the best one for your situation.
If you’re not sure which way to go get an advice from a legitimate debt counselor. Talking to a pro is good for you to explore pros and cons of all your options. A suggestion like improving credit rating before getting a loan is an example of what you can get from the specialist. But above all, you’ll know for sure whether debt consolidation loans for bad credit is the best option.