Consolidating Your Debt When You Have Bad Credit
Are you currently struggling with bad credit? Many people unfortunately end up with a poor credit score because they’re in so much debt and their score got damaged because they couldn’t pay it off. Instead of floundering in mounds of debt, you need to take time to do something about it.
A simple way to lower your interest rates and get your credit card and other debt under control is to consolidate everything into a single loan. This will make your life much easier and debt management will become possible after you’ve consolidated your debt even with bad credit.
With that said, there are a couple of ways that you’ll be able to consolidate your loans even if you are struggling with bad credit. It might not be as easy for you as other people, but it definitely is possible.
According to Debtconsolidation.loans, a website letting you know is it easy to get a debt consolidation loan with fair credit, “A debt consolidation loan is when you are given a loan to pay off other debts. The result is that your bills are consolidated into one place so you don’t have to worry about tracking multiple different payments.”
Let’s now take a look at some of the debt consolidation with bad credit possibilities.
Use the Equity in Your Home for Debt Consolidation Purposes
You may not realize this, but one option as a homeowner is to use your equity as collateral for loan consolidation.
Now, it’s important that there is significant value in your home. If you still owe nearly 100% to your mortgage company, then you’ll have a nearly impossible time using your home as collateral.
But at the same time, if you bought your house 15 or 20 years ago and you’ve significantly paid down your mortgage, there is certainly lots of equity available in your house. You can use that equity to take out a home equity line of credit or as collateral for a debt consolidation loan.
The advantage of this option is that you will lower your interest rates. And not only that, you’ll even significantly lower potential borrowing costs and other fees.
Remember, the interest on a home equity line of credit is going to be a lot cheaper than the interest that you pay on a credit card or many of your other loans. So taking out a line of credit against your home equity is definitely a good idea.
For homeowners 62 years and older, one way of easing up the burden of debt consolidation is through a reverse mortgage. With the help of a reverse mortgage calculator, you’ll get an idea on how much of your home’s equity you can tap into.
Do Not Hesitate to Shop Around for the Best Deal
With so many debt consolidation loan options, you’ll have lots of potential selections to choose from. So it’s going to be very tempting to pick the first loan that you qualify for when you have bad credit.
Don’t do it!
Now we’re not trying to say that the first loan won’t turn out to be the best. It certainly might just end up being the perfect option for you. But you’ll never know about your other potential choices unless you spend time shopping around first.
Take some time to look for the right options that’ll make the most sense to you.
In one instance, some people prefer to have the lowest available interest rate possible. This keeps their overall payment low and makes it affordable to pay off their credit card debt and other debt for that matter.
On the other hand, some of you may want a loan that has a shorter length or a longer length. If you have a longer length loan, you’re going to end up paying more interest over time but your payments will be lower. If your loan has a shorter length, you’ll have to pay more money each month but the principle will get paid off faster.
Remember, some loans are going to be better than others when you have bad credit. So make sure you always shop around to get the best deal.