6 Debt Consolidation Options for your Bad Credit History

If you have a poor credit score, you do not need to approach your bank for a personal loan. Many people go for such conventional means and get turned down so fast. Having a low credit score does not mean that you won’t qualify for a loan anywhere. That is why other financial agencies have been formed to cater for this need.

Banks work with the risk-based pricing model, which makes it difficult to obtain a loan if you do not have an impressive credit score. Find out more details with #1 debt Consolidation Company on the options available for you. Read on to find other options that you can consider, including those that will not work for you!

Credit unions and banks

You stand a very low chance of getting a loan from these institutions if your credit score is not above 700. If by chance you are offered the loan, it will come with very high interest rates due to your poor credit history. This is why many people turn to friendlier options. It is not easy to come by a great credit history.

Loans with high interest are very expensive; since you will pay much more in the end even though the monthly payments will be low. This is why many people turn to debt consolidation companies.

Debt Consolidation Companies

Although debt consolidation companies are usually the perfect option for consumers with a bad credit history, you will need to be careful not to be tricked. Many fraudulent companies are out to extort people. Therefore, make sure you settle for an organization that is accredited by the government. You should also ask independent financial experts to confirm to you if the organization is legit. Do your research on debt consolidation reviews to find out what people are saying regarding the company.

With a debt consolidation lender, you will combine your different loans. The company will take over the conversation with your previous lenders, after which you will pay off the joint debt to the debt consolidation lender over time. This will be much simpler for you to manage your financial remittance after everything is joined. Another upside of this type of loan is that usually, the interest rates do not fluctuate. Your repayment value is therefore fixed within your repayment period, which is typically between 2 years to five years.

If the debt consolidation interest is too high for you, you can request for a co-signer. Most of the times, lending facilities accept co-signers to smoothen the loan repayment terms. This ushers us to the next point:

Co-Signing

In co-signing, you as the lender will need someone to be the guarantor of your debt. The downside of this mode of repayment is if you skip a payment, your friend or family who has guaranteed you will be forced to pay for you. This mode has turned many relationships sour, hence you should really re-consider before taking this step. However, co-signing can significantly increase your chances of getting a loan with a low credit score, more so if you get a guarantor who is financially stronger and has a better credit score than you have.

Online Lenders

This can be another viable option for you, since many online lenders cater for those with a low credit score. However, they will still check your credit history to determine your interest rate. Your interest will definitely be higher if your credit score is low. You will pay an origination fee ranging from 1%-6% to start the loaning process. Some online lenders can offer you the option of co-signing, which can better the terms of agreement.

Payday Lending

This is the riskiest of them all. Payday, cash advance or no credit-check installments-all these terms mean the same thing: whereby you are given quick cash to repay in about two weeks. Remember, when the deal is too good think twice! This mode of getting a quick loan has the highest forms of interest rates ever that get up to 1,000%! That is utmost craziness! These lenders make big business from the desperate. If you are highly considering a payday loan, chances are you are debt sick!

One can get a longer repayment time with no credit-check installments, but be aware that you will pay up to 200% in interest rates. Save yourself from this madness and take up another option please!

Consumer Counseling Agencies

Many people choose consumer-counseling agencies thinking that their debt will not earn interest, since these agencies indicate that they are ‘non-profit’. The term non-profit only means that the agency does not pay tax from what they earn. Hence, your loan will still have interest. However, these agencies can offer you great financial aid since they can help you in a way other lenders do not. For instance, consumer-counseling agencies can approach your current lender and negotiate lower interest rates to decrease your debt. Hence, they offer a suitable Debt Management Plan for you.

Counseling agencies still work as usual debt consolidation companies. They help to consolidate your debt after which you will repay them as per the terms you sign up for. The consolidation company then distributes your repayment to your different creditors.

This may be the best option for you if you would like help to get out of debt. Your financial counselor from the agency can walk with you in your budgeting, and can take you through financial tips and resources to help you make better choices in financial management.

Conclusion

Although these are viable options to choose from, you should work on improving your credit score as a matter of priority so that you stop limiting your borrowing options. It is very worthwhile to have a good record in your files – you do not know what the future holds.

Significantly reduce your loan applications to stop appearing desperate in your records. Also, be very committed to your debts’ monthly repayments, and communicate in advance in the event of not being able to meet the requirements due to an honest, legitimate reason. It is possible to improve your credit history if you start making these steps today!