Debt Consolidation When You Have Bad Credit

Debt Consolidation When You Have Bad Credit

Having bad credit is sometimes unavoidable especially if you have already suffered through job loss or illness that left you unable to pay your bills.  Find any kind of loan including a debt consolidation loan with bad credit is difficult.  It is not impossible however, you can find lenders that specialize in debt consolidation when you have bad credit.  Be wary though there are many scams among them too.  Here are some tips to help you find a genuine loan provider.

Ask for referrals

If you have a low credit score then traditional financial institutions aren’t going to be interested in lending you money.  When looking for an institution that will deal with those with less than perfect credit scores then look for a recommendation from legal consultants, your own bank or someone who has been in your shoes.  You want to minimize your risk while dealing with your debt.  Here are some tips on bad credit loans.

Verify the Credentials of the Lender

Always be careful when borrowing money and look into the fine print.  Start by contacting the Better Business Bureau to make sure that your lender has a good reputation.  Are there consumer complaints that you need to be aware of?  Is there a history of fraud or unfair lending practices?  If the company has a long history of complaints then you should stay very far away.  Some states don’t even allow for commercial debt consolidators to do business there, so you also need to check with your state’s licensing board.

Do they Provide Other Services

Non-profit debt consolidation companies are far less expensive than those that do this as a business. If you want to save yourself some money, and of course you do, the always look into the details of the service that the lender provides.  Most will offer you a free consultation and help you put together a budget based on your own financial situation.

Get it in Writing

Before you ever agree to any kind of loan always get a formal loan proposal from your potential lender.  That proposal needs to include things like the lifetime of the loan, the interest rate, how much your payment will be every month and if you are going to use anything as collateral.  Before you sign anything, sit down and read it over carefully first.

Getting a debt consolidation can lead you down the path of financial freedom and help you to repair your credit as well.  Assess any potential lender carefully you want to make your credit score better and not worse.

Debt Consolidation Tips

Debt Consolidation Tips

Wouldn’t you like to get rid of your debt, wouldn’t it be great not having that burden on your shoulders constantly?  Being debt free is truly an incredible feeling.  It’s going to take some work to make it happen but it’s a completely realistic goal.  Despite the feelings to the contrary you do have options, and one method of getting rid of debt that many turn to is debt consolidation.  Before you choose that option there are some things to consider, here are some debt consolidation tips to make the whole thing a smoother process.

Write it down

Before you even consider consolidation write down all your debts including the monthly payments, amount you owe and the interest rates that you are paying to each creditor, be as accurate as possible.  You need to have all of your information on hand before you move forward.

What can you afford?

Chances are right now you are having a hard time making all of your payments on time and that is why you are looking into debt consolidation.  Sit down and create a budget that outlines all of your income and expenses and determine how much money you can afford on debt repayment.

Shop around

There are plenty of financial institutions that offer consolidation loans and all of them will offer you different rates and repayment terms.  Look at the fine print too, while the lowest interest rates seem like the best option, but not if there are huge balance transfer fees.  Always look for the catch that could end up costing you far more than you want to spend.

What debts to include

Debt consolidation loans come with an interest rate and more often than not it is lower than what you are currently paying on all your debts.  If you have an outstanding debt at a lower interest rate than your debt consolidation loan then don’t include it.  Use the lower interest rate to pay of higher interest loans.

There are risks

Debt consolidation can save you money and make your life so much easier but it is not without its own risks.  While you are paying off your loans you need to harness enough self-discipline not to create more debt in the meantime.  Don’t start using those credit cards again!

Debt consolidation is not without pitfalls and it may not be the solution to your financial problems.  If you follow these tips and learn from your financial mistakes you can become debt free and breathe a little easier.