Bad credit can threaten to ruin your future and all the hopes of ever consolidating back to stability.
But debt consolidation loans are an excellent way to stabilize your bottom line and begin clearing your balances.
These funding products merge all debts into a single account, enabling borrowers to make only one per-month payment until they clear the balance.
But you need good credit to qualify for a debt consolidation loan. However, this is not always given.
Acquiring a debt consolidation loan with bad credit
To qualify for a reasonable debt consolidation loan, the applicant must have a FICO score of not less than 700. However, anyone who falls below this line is not without alternatives.
Borrowers looking to acquire a consolidation loan with poor credit need a loan cosigner to consolidate without a hassle. Still, people with poor credit should take extra caution when seeking a loan because phony players target bad credit borrowers.
Doing a thorough search is crucial if you have low credit. This can ensure you get the best rate for your situation.
How to Boost Your Credit Status
The good thing, it is possible to improve credit status even with low credit scores. You can do this in many ways;
- Reduce debt and balances on credit cards
- Make timely bill payments, all the time
- Fix any mistakes in your credit report
- Seek an increase in credit line cap
- Become an eligible user on a high-credit account
- Keep away from new loans and credit cards
- Maintain long-lived accounts even after clearing debts.
A debt consolidation loan allows you to save on interest and can lower the lump sum you pay in the long run. This can help you clear your credit much faster.
The Advantages and Downsides of Clearing Debt via Debt consolidation
Consolidation loans can come with many advantages. Below are the primary pros.
- It eases the loan settlement process; because all you have to do is make a single per-month payment.
- You pay less at a lower interest rate; a consolidation loan can help reduce the amount you pay per month and ensure you recover from debt much faster.
On the flipside, consolidation loans can be dangerous– more so if you have bad credit.
- May worsen your money problems: Failure to pay back this loan or, worse still, using these products for other things than clearing debt.
Bad credit can threaten to ruin your future and all the hopes of ever consolidating back to stability. But debt consolidation loans are an excellent way to stabilize your bottom line and begin clearing your balances. However, it’s advisable to study contract terms thoroughly before entering a deal.
Author Bio:- Michael Hollis is a Detroit native who has helped hundreds of retailers acquire business loans. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.