Lots of people are looking to find their way out of debt and make their budget and their lives more manageable. They have probably looked into getting a debt consolidation loan. You take all of your current loans and put them into one loan, with only one payment per month. Preferably at a lower interest rate and smaller payments than what you are trying to juggle right now. You have a definite end date of when the loan will be paid off instead of a never-ending pile of bills.
What if your credit score is less than perfect? You want to improve your finances and get back on track, being debt free seems like a dream. A debt consolidation loan would help you get a grip on your finances and work towards achieving that goal of becoming debt free. Don’t let your credit score hold you back there are options out there for you.
The biggest fear of having a bad credit score is that you will not be able to get approved for any loan. If an emergency comes along, you need a new car, or it is time to move to a bigger/smaller home, you may not be taking action because you are worried about getting a loan approved. Wanting to consolidate your debt with a debt consolidation loan causes the same worry. Here is some information to help you get the things you need.
Banks or Loan Consolidation Companies
You’re first instinct when you need a loan is to go to the bank, but there are debt companies as well. Banks, credit unions, and finance companies have stricter criteria when it comes to lending money. However, if you get turned down by the bank, look into a debt consolidation company. They have plenty of experience dealing with people who have less than stellar credit.
Be careful of who you work with, not all of them are legitimate companies. Here are some red flags, if they offer you government money to take care of your debt or they don’t take the time to go over your financial situation with you or try and charge you upfront fees. Bear in mind that loans that involve bad credit will come with higher interest that will cost you more. You are however getting out of debt, and you can pay it off sooner when your income increases.
Improve your Credit Score
You can work on trying to improve your credit score before you apply for a loan. Monitor your credit score regularly to make sure that any changes are positive ones. Try and make your payments on time as this will help greatly. Pay down as many past due to credit cards and avoid opening new accounts no matter how tempted you might be.
If you cannot get approved for financing with a debt consolidation company, then it might be time to try debt management or debt settlement company. These are designed to help you pay down your debt within five years, and it is your last resort before bankruptcy. Bear in mind that there will be a significant impact on your credit score.