Bad Credit Debt Consolidation - What Are Your Options to Reduce Your Debt With Poor Credit?
To reduce your debt with a poor credit
history, you have several options. While none will
solve your credit problems overnight, they can help
you get on better financial ground. A debt consolidation
loan can help you reduce your monthly payments, while
lowering interest rates. A debt consolidation program
services your debt and negotiates lower interest rates.
The final option of debt settlement or bankruptcy
pose longer credit repercussions.
Debt Consolidation Loan
A debt consolidation loan is either
a home equity loan or a personal loan which is used
to pay off your bills and unsecured debt, including
credit cards. A home equity loan allows you to deduct
your interest from your taxes.
With both types of loans, you can negotiate
terms for smaller payments over a longer period. However,
remember that you will be paying more in interest
this way. You also want to make sure that your debt
consolidation loan has lower interest rates than what
you are currently paying.
Debt Consolidation Program
Debt consolidation programs service
your debt by negotiating lower fees with your creditors
and administering payments. All debt consolidation
companies will get you the same low interest rate
on bills since this is predetermined by the creditors.
The difference between companies comes from the amount
they charge for fees and their customer service for
following through with accounts.
By using a debt consolidation program,
you prove to creditors that you are committed to paying
back your debts. Within a couple of years, you can
have improved your credit to the point of being able
to apply for new credit, even a mortgage loan.
Debt Settlement And Bankruptcy
If you are several months behind on
payments or cant afford debt consolidation fees, you
may want to consider debt settlement or bankruptcy.
With both options, part or all of your debts are reduced.
This is not a choice to be considered lightly. Your
credit will suffer for several years by using either
option. However, if you find yourself in dire financial
difficulties, know you can use these options.
To decide which option is best for you,
take a hard look at your finances. Ideally, you want
to pay back your bills and loans to minimize any damage
to your credit. A debt consolidation loan will usually
have the least impact, followed by using a debt consolidation
program. Using debt settlement or bankruptcy will
stay on your credit history for seven to ten years.
To view our list of recommended debt
consolidation companies online, visit this page:
Recommend ed Sources for Debt Consolidation Online.
Carrie Reeder is the owner of ABC
Loan Guide, an informational website about various
types of loans.
