As this video explains your 550 credit score means prospective lenders will see you as a poor credit risk so your chances of getting a debt consolidation loan are somewhere between incredibly slim and no way.
Why you have a lousy credit score
If your credit score is less than 600, it’s likely because you’ve missed a number of payments or nearly maxed out your credit cards. Since you haven’t been able to keep up with your credit card payments in the past, a lender will not give you a debt consolidation loan to consolidate your debt with your bad credit score.
Your debt-to-credit ratio
Beyond this you need to figure out your debt-to-credit ratio as it accounts for 30% of your credit score. Your debt-to-credit ratio is calculated by taking the amount of debt you’ve used and dividing it by the total amount of credit you have available. For example, if you have $5000 in total credit available but have used $4500 of it, your debt-to-credit ratio would be 90%, which is much too high.
You need to get help soon
If you have $25,000 in credit card debt and a bad credit score this indicates you’re on the edge of a financial crisis and need to get help soon. Since you cannot qualify for a debt consolidation loan you might turn to credit counseling or file for bankruptcy. However, there is another option that would get you out of debt that has become increasingly popular. It’s called debt settlement.
Debt settlement explained
Debt settlement is where you offer a lump sum payment for less than you owe to clear the debt. As an example of this if you had a $5000 debt you might offer a lump sum payment of $2500. If the lender agrees to your offer it will then treat your debt as if it had been paid in full – so far as you’re concerned.
While it’s possible for people to settle their own debts most choose to hire a debt settlement company. There are two major reasons for this. First, it eliminates the need for them to have the money available to pay off their settlements, which can be a considerable amount. Second, debt settlement companies have experienced debt counselors that have very good working relationships with the major lenders and are usually able to negotiate much better settlements than people can themselves.
You’ll stop paying your creditors
Another plus of using a debt settlement firm like National Debt Relief is that you’ll no longer be required to pay your creditors. Instead, you will make one affordable payment to the debt settlement company each month until all of your debts have been successfully settled. In addition, the settlement firm will contact all your lenders to let them know it’s now managing your debts and that they are not to contact you any further. This usually eliminates those annoying calls from your lenders or, worse yet, from nasty-tempered debt collectors.
How long does a debt settlement program typically take?
The money you send a debt settlement company such as National Debt Relief will be deposited in a trust account that you control. When enough money has accumulated in your account to settle one of your debts the settlement firm will contact you and ask that you release enough money to cover the settlement. This process continues until all of your debts have been settled. This can take anywhere from 24 to 48 months depending on the total amount of your debt.
There is help available
The good news is that if you’re struggling with credit card debt there is help out there. Call National Debt Relief now to learn the best ways to reduce your or go to www.nationaldebtrelief.com