In this article, we have compiled four (4) tips to help you consolidate your credit card debt with bad credit.
When debts are mounting, debt consolidation can make repaying debt easier, with only one periodic payment, one set of fees, and one interest rate to pay.
If chosen wisely, this can also save you money and help you regain control over your finances along the way.
Tips To Help You Consolidate Credit Card Debt With Bad Credit
The most efficient way to consolidate your credit card balance depends on your credit history, credit standing, how much debt you have, and whether you have properties or other investments that will allow you to pay off your consolidated debt.
Listed below are the four tips you can follow to help you make payments more manageable and keep your credit card balances low.
Check Your Credit Report
Your credit rating, also known as credit score, is described as the manifestation of your overall financial health. Credit reports list your current debts, loans, payment history, and other financial information. Lending institutions and agencies use this information as a basis to know whether a borrower is qualified for a specific loan product or not.
Many banks offer free online tools to help you check your current credit standing in order to know whether you met the lender’s minimum requirement for debt consolidation. Knowing your credit standing is crucial in determining your options, but even with poor credit, there are still ways to consolidate your credit card or other debts.
Compare Loan Providers
Once you know your credit score, you can now start comparing different lending institutions and compare factors like lender fees, interest rates, and loan terms. Fortunately, lenders are legally required to show prospective clients lender fees, upfront, and ongoing charges alongside the interest rate.
Doing your research by comparing rates may take some time, but it can help you save hundreds or even thousands of dollars.
Furthermore, reviewing rates can also give you a more accurate idea of how much you can expect to pay over a particular period or for the entire life of your loan. Because of this, comparing rates can be a valuable step to do when hunting for the right loan for you.
Getting accepted for debt consolidation can be more difficult if you have a poor credit rating, but it is still possible especially if you have a co-signer or you’re open to getting a secured loan.
By having collateral under the name of the borrower like a house or investment, it can increase the chances of qualifying for consolidation and receiving lower interest rates.
However, it is advisable to get debt advice before considering secured debt consolidation, as you may lose your home or car if you can’t keep up with the debt repayments.
Have a Co-Signer
In some cases, your lender may request you to get a debt consolidation co-signer–can be a family or friend who has a better credit report than you–prior to signing your loan application.
As a guarantor of your loan, your co-signer will also need to have a proven track record of repaying debts in a timely manner, since the lending institution or agency will hold them responsible for the loan until it is paid out.
Therefore, it is crucial to be very careful about pursuing this option as it may strain or destroy your relationship with your co-signer.
With more and more people accruing high balances of loans and credit cards, finding the best way to repaying debt is critical. Consolidating several monthly payments into one can also lower the rate you’re paying on your credit cards and avoid missed payments.
So if you’re interested to consolidate credit card debt with poor credit, it can be a good idea to find a qualified partner to help.
You can start by speaking to a certified and reputable counselor to review your finances and determine the best debt management plan for your situation.