There are several ways to handle credit card debt problems when you have bad credit. One of the things that consumers can take comfort in is the fact that many people with credit card debt problems do have bad credit. That is why there are options available for people who have credit score issues. But are there consolidation loans available with a bad or poor credit score?
While there may be many options available, there is only one option that makes sense. People choose debt consolidation loans as their preferred way of handling overwhelming credit card debt. But there are several reasons why you should avoid consolidation loans and go with the better alternative of debt negotiation.
- The Problem Remains Intact
Debt consolidation takes your credit card balances and moves them from several accounts into one account. The step that is missing is the step that addresses the actual balance that you owe.
With a consolidation program, you do not start reducing your debt until you start paying on it. With debt settlement, the first step is negotiating payoff amounts on your credit accounts and lowering your debt to a fraction of what you owe.
- Credit Check Required
A debt consolidation loan is a standard loan that requires a credit check before you can get approved. If your credit is bad, then you may not get approved for a consolidation loan at all, or you would get approved for a loan with a very high interest rate (25 – 35% APR). Neither one of those outcomes works to your benefit.
Anyone can use a debt settlement program as there are no credit score requirements. A debt negotiation program is the ideal solution for people who have bad credit because your credit score has nothing to do with the way in which your plan is structured. The debt settlement professional is only interested in your credit card accounts and how they can be reduced.
Any debt relief program is going to cost you money. But with debt consolidation, you will wind up paying loan processing fees, high monthly service charges and you will continue to pay interest on your credit card debt. If you add up the charges you pay on a consolidation loan, you may start to see that you are paying more to have the loan than you did to carry the separate credit card accounts.
When you find the right debt settlement company, you will only pay for the service when it is successful. Aside from a low monthly service charge, your monthly payment is based on your payoff balances. There is no extra interest added on to your balances, and you do not have to pay any loan processing fees.
One of the reasons why people with bad credit scores prefer debt consolidation loans is because debt consolidation companies spread out the loan payments over several years, up to 10 years and help lower the monthly payments. The problem with that plan is that you wind up paying interest charges on up to 10 years of consolidation loan payments.
A debt settlement program administered by an experienced and professional organization will take anywhere from 24 to 48 months to complete. If you apply some of the money you are saving every month by having your debt lowered, then you can pay that balance of on an even more accelerated schedule.
- The Full Process
A debt consolidation process consists of grouping your debt together, determining how much money you will need to borrow to pay that combined balance down and then shopping around to get you a loan. The debt consolidation organizations leave the possibility of the debt returning open by doing nothing to address the core debt and spending issues.
A debt settlement organization is a professional debt relief company that is experienced in helping people to get their debt under control and develop good spending habits. It is not enough to just move debt around and then add more interest to that debt by putting in into a loan. That does not help your process. With debt settlement, you get a full debt relief process that lowers your debt and teaches you how to avoid it in the future.
When people have bad credit scores, they sometimes feel forced to take bad deals with consolidation loans that have high interest rates and use high monthly fees. The truth is that debt settlement is a much better option for people with bad credit and a debt settlement professional can help you to reduce your debt in as little as 24 to 48 months.
We have experienced financial professionals on staff who are waiting to help you reduce your debt through the debt settlement process. Let our debt relief experts work with you to develop your comprehensive debt profile and develop a plan that will work. Pick up the phone and call us today to get started on the right debt relief program for you. Let us explain why consolidation loans with a bad credit score are not a smart way to pay down your unsecured debts.