In times where many people have bad credit scores and are struggling with bills and multiple debts, is it possible to consolidate these debts with a debt consolidation loan even if you do not have a good credit score? We are going to answer this question and also give you some ideas on how to get out of your debt if you have a poor credit score. Before that, let’s discuss just how big of a problem debt is.
Is debt the biggest financial issue of our time?
It is probably yes. Many people nowadays are having real difficulties with managing their finances. Even paying their regular monthly bills is often quite hard. And, of course, monthly bills are not all that you need to think about these days. There is always an unexpected emergency expense waiting to happen. So in such unstable economic environment, people naturally go into debt because of necessity. There are many different reasons for a person to end up with a single or multiple debt. Some people simply want to graduate college but cannot afford to do it on their own. Others want to buy themselves a house. The people and their situations are different, and so there are different types of debt. Some of the most common include:
- Student loan debt
- Credit card debt
- Car title loan debt
- Mortgage loan debt
And that list goes on.
Dealing with debt
What type of debts you are carrying is not the most important thing. What all debt types have in common is that they can really make your life a lot more difficult. So regardless of what type your debts are, the important thing is how are you going to get rid of them. There are different methods for dealing with multiple debts. One of the most popular for dealing with multiple debts is with a debt consolidation loan.
What is a debt consolidation loan?
Debt consolidation loan is one of the financial methods for consolidating multiple debts. With a debt consolidation loan, you basically shuffle all your existing debts into a completely new and larger debt consolidation loan. What that does is basically allowing you to focus on a single monthly loan payment instead of having to constantly keep track of multiple debt repayment bills. When you consolidate your debts with a debt consolidation loan, you will usually get new terms for that loan. That can be both good, and not so good, depending on your specific financial situation, especially the state of your credit score. A debt consolidation loan can also mean a reduced monthly payment. Again, that can have an overall positive impact or it can have a rather negative one down the line. Debt consolidation loans are great financial tools for dealing with multiple debts. However, they are not the perfect answer for every situation. So, you need to be sure that debt consolidation loan is exactly the tool that you need in order to finally reach the point of debt freedom.
Are there debt consolidation loans for people with bad credit?
If you are considering consolidating your multiple debts with a debt consolidation loan, one of the main factors that can determine whether that decision will be good or not is your credit score. Getting a debt consolidation loan with a perfect or at least a decent credit score is, of course, a lot easier than getting one with a bad credit score. That does not mean that consolidating your multiple debts with a debt consolidation loan would be impossible. It is just going to be harder. There are many private debt consolidation loan lending companies that offer bad credit debt consolidation loans to their customers. However, just because a debt consolidation loan for bad credit is available, does not necessarily make it a good option. Here is why. The reason for consolidating your debts in the first place should not only be to have a single monthly payment instead of many, but to also have better terms and to ultimately save a significant amount of money. Getting a bad credit debt consolidation loan with better loan terms would be almost impossible. You would most likely have to accept that your loan will have a higher interest rate. If even with a higher interest rate, a debt consolidation loan is still what you are looking for, then taking out that loan may work out just fine. Debt consolidation loan does offer some really good benefits that are just hard to overlook.
Debt consolidation loans benefits
Even though a debt consolidation loan is not a bulletproof way for dealing with multiple debts, there are some solid benefits that can really drag you into using one. Here are some of these benefits:
A single monthly payment
Getting a single monthly payment instead of the multiple monthly bills is a really important benefit. Being able to focus only on a single monthly bill can really make your life a lot easier. Not having to keep track of a number of debt repayments will not only relieve you from your stress, but it can also give you a lot more time to take care of other important areas of your life. In addition to that, having a single monthly payment really reduces any risk of late payments as it enables you to structure your budget much easier and quicker.
Better loan terms
As we have already mentioned, getting a debt consolidation loan comes with new loan terms. In case you have a bad credit score, these terms may be the same as the ones that you already had on your debts or they can even be a bit worse. However, if you have a good credit score, you would most likely be able to qualify for a debt consolidation loan with better loan terms, including a lower interest rate.
Lower monthly payment
Not only will you have a single monthly payment instead of multiple loan payments, but that payment is going to be lower, at least in most cases. A lower monthly payment can really make a difference in your life. Having multiple debts can be exhausting and so having a single payment that is also lower can really free up some much-needed space in your budget. By having this extra money, you will be able to take care of your other bills without having to use another loan.
Whether you choose debt consolidation loans as your method for dealing with multiple debts or not, the most important thing is to do what is necessary to better your financial life. Keep in mind that there are no shortcuts, no quick fixes when you are dealing with multiple debts and debt consolidation loans make no difference. In order for your debt consolidation loan to actually have a positive impact on your financial life, you would need to fully dedicate yourself to the goal of reaching financial freedom. All this is easier said than done. So before you decide whether or not to apply for a debt consolidation loan, make sure that you are ready for what is ahead of you. You may need to make some changes in the way you live. But at the end, it will all be worth it.