Bad Credit? Consider Debt Consolidation Loans for Financial Relief

It can be difficult and overwhelming to manage different credit cards and keep track of due dates or outstanding balances. You start wondering, “Which one should I pay first?” or even accidentally miss payments because you have so much on your mind. Debt consolidation can make your life easier.

Debt consolidation is when you transfer all your debt into one loan, so you only have to think about one monthly payment. It is a simpler way to plan your budget and monitor how much debt you have to pay off.

Will I Be Approved for Debt Consolidation if I Have Bad Credit?

While debt consolidation can give financial relief, the process of applying for it can be very stressful. That’s because many banks set a high bar for approval.

They typically require a minimum credit score of 650 to 700 to even be considered. They will also look at your total debt-to-income ratio, and check your employment history.

Fortunately, banks aren’t your only loan option. Smaller finance companies are starting to offer debt consolidation loan packages for people who have less-than-perfect credit.

To find legitimate debt consolidation companies, look for the following criteria:

•       Accreditation: Look for a debt consolidation company that is accredited by a reputable organization, such as the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). This indicates that the company meets certain standards and has a good track record of helping people with debt.
•       Credentials: The company's staff should be trained and certified in debt counseling and consolidation. Check if the staff has credentials such as Certified Financial Planner (CFP) or Accredited Financial Counselor (AFC).
• Convenient online application. Your time is valuable. Look for a convenient online application where the website is secure. A quick tip is to look for a lock symbol in the corner of the browser.
• Transparent credit check. The loan provider should be clear about running your credit and even give you an understanding of what they are looking for on your report.

Will Debt Consolidation Improve My Credit Score?

A significant component of an individual's credit score is influenced by their payment history and debt-to-income ratio. Late payments and reaching the maximum limit on credit cards can adversely impact the credit score.

However, debt consolidation presents an opportunity to systematically reduce debt and rebuild one's credit history. This process is gradual and necessitates the focus on a single loan, with every successful payment contributing positively towards the credit score.

On the other hand, if individuals must manage payments for multiple loans, they may be more prone to overlooking payments, which can prevent the credit score from recovering and make obtaining loans in the future more challenging.

4 Steps for a Successful Debt Consolidation

One of the reasons why debt is so intimidating is that you don’t know where to start. Just follow these steps to overcome debt for good.

Check Your Credit Score

You’re entitled to one free credit report every year. You just have to go to AnnualCreditReport.com or contact individual credit bureaus like Experian.

It’s important to read your report so you can check for errors, and know what is pulling down your score. It’s just like seeing a doctor to find out what medicine you need to take — you can’t solve a problem you don’t know you have!

Check If You Qualify for Debt Consolidation

You can find out right now! Just fill out the form on the site, and you will know ASAP if you can get the loan, how much you qualify for, and the terms and conditions.

Manage Your Budget

With a debt consolidation loan, you will only have to think about one fixed payment every month. So, now you can adjust your budget accordingly. You may have to cut out luxury expenses or impulse buys, but don’t think of it as giving up something.

Instead, you’re funneling your hard-earned money into more important financial goals, such as becoming debt-free and having a higher credit score.

Track Your Debt

Log into your account regularly to track your payments and monitor your debt. If you have any questions, or concerns, or anticipate any problems, contact our customer service representatives for advice.

Take a Step Towards Being Debt-Free

Credit should be more accessible and available to everyone. Many banks only serve those who have good credit—and ironically, this excludes those that need debt consolidation the most.

Debt consolidation allows more Americans to take a step towards being debt-free. Debt consolidation allows more Americans to take a step towards being debt-free by simplifying their debt management and reducing the overall interest rate on their outstanding debts.

This not only provides a sense of financial relief but also frees up funds that can be redirected toward other expenses or long-term savings goals.

Additionally, by consolidating debt, individuals can avoid the negative consequences of missed payments, such as late fees and penalties, which can further impact their credit score and financial standing. Overall, debt consolidation is a viable solution for those seeking to take control of their finances and reduce their debt burden.