Debt Consolidation For People With Bad Credit

Do not let a poor credit history stop you from pursuing your goals. Debt consolidation for people with bad credit is common and very possible in today’s society. Although you may not have as many options as someone with a clean credit score, there are still several options available for debt consolidation.

Here are some options that may be available to you.

Consolidation of Student Loans
I am surprised at how many people have this option available to them but do not act on it. If you have student loans, you may be able to consolidate them and reduce the monthly payments. For more information about this option, see Student Loan Consolidation.

Debt Consolidation Loan
Debt consolidation loans come in two types Secured and Unsecured, for details around the differences, see Secured vs. Unsecured loans. Secured loans are easier to obtain and normally provide better interest rates than unsecured loans. Depending on your credit rating, a secured loan may be your only option.

The most popular secured loans are normally reserved for home owners because the home is used as the collateral for the loan. These loans are either Home Equity Loans (HELs) or Home Equity Lines of Credit (HELOCs). These loans allow you to borrow against the equity you have in your home. Home Equity Loans normally provide a better interest rate than Home Equity Lines of Credit, however keep in mind that if you sell your home the loan will become due in full.

There are also other less popular secured loan options for example if you have equity in land, a car, boat, bonds, motorcycle, basically if you have something of value you may be able to use it as collateral for a secured loan. I have a family member who started a business a few years ago by taking out a secured loan on a car he had paid off.

Unsecured loans can be harder to obtain for people with lower credit scores. Normally they come with higher interest rates and there is a lower limit on the amount of money lenders are willing to lend to an individual without collateral. One newer option is a website called Prosper. This website allows for Person To Person Lending, and may be a good option for a secured loan under twenty five thousand. Rates seem to be reasonable, worth a look if you have not found success elsewhere.

Debt Consolidation Companies
If consolidation loans are not available for you, you can consider debt consolidation companies. These companies offer another way of debt consolidation for people with bad credit. The company will negotiate a debt settlement with your creditors. Making arrangements to pay your creditors an amount you can afford. Normally it is better to work with a debt consolidation company than declaring bankruptcy, however evaluate your options closely as situations vary from person to person.

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