Consolidating your debt can be difficult when you have poor credit. However, it is not impossible to consolidate all of your bills. I would recommend consolidation to anyone who is looking for debt relief that does not involve bankruptcy court. Avoiding bankruptcy allows you an opportunity to actually raise your credit score. The only obstacle you face is how you can consolidate your bills.
Traditional Consolidation Is Out Of The Question When You Have Poor Credit
You could think about using low balance transfer cards as a way to consolidate your debt. However, you need a good credit score to qualify for a card that would give you credit card relief. Secured lines are an option, but do you have the money to secure another line of credit? The answer is most likely not. Therefore, credit card balance transfers will not do any good.
Home equity lines of credit are also going to be out of the picture. Your credit score would have to be at least 650 to qualify, but to get the best rates to make it worthwhile you would need a good FICO credit score of 740 to 760. Also consider how many people with bad credit can afford a mortgage payment. Could you really afford to bring on another mortgage payment?
You can forget about any unsecured consolidation loans if you have bad credit. Banks typically only give those loans out to borrowers with really good credit. Even then, it is no guarantee that anyone would be approved. You can forget about that for now.
Debt Relief Services Can Help You
Since you have bad credit, it is to your advantage to seek help with a more aggressive form of credit card bill consolidation. Debt relief services will provide you with an opportunity to finally deal with your creditors in good faith. Your creditors no longer have any incentive to not listen to your offers to consolidate and settle.
You can get better deals with a debt relief service because you are now working with professionals with experience dealing with all the major credit card companies – Chase, Bank of America, American Express, Discover, and Capital One. They can help you get the best possible outcome for your debt issue. Professionals will have the relationships, experience and leverage needed to negotiate a better deal than you could on your own.
Say you have $15,000 in credit card debt that cannot be paid off. Your creditors may want you to pay late fees, higher interest rates and other penalties. That is not going to help you get ahead on your debt. Debt relief professionals will negotiate a deal to completely wipe out fees and penalties. Plus, get the balance reduced to a fraction of what you owe It does not matter if you have good or bad credit.
The balance and interest rates will be significantly reduced. You will now make just one debt payment each month to the bill relief service. They in turn will pay off all your creditors once they have negotiated a fair settlement. Understand that consolidation only works on unsecured loans – credit cards, medical bills, payday loans and business debts for example. Settlements are rarely given on secured loans and Federal student loans.
Turn Poor Credit Into Good Credit
Late payments on your credit card bills can cause a credit score to fall by 100 points or more. As you go through the consolidation and settlement process, your credit score will decline. BUT, your credit score will increase shortly after your credit card accounts are settled. It’s a lot easier to keep up with your payments when your balance is $0.00 than if it was $14,880 on a $15,000 credit limit card.
You will be able to start fresh with zeroed out accounts. Your debt to income ratio will be a very low number and you will be able to service your bills once you have no more credit card debts or medical bills.
Your future accounts being kept in good standing will offset the negative marks creditors may place on our credit reports from the settlements.
Establishing a track record of paying your bills on time will keep increasing your credit score where it is after consolidation. I would suggest setting up an auto-payment system as a way to never forget making a payment.
Consolidating your bills is possible even if you have bad or really poor credit. Going to a top rated debt consolidation company is a good way to work out a consolidation plan. Negotiating with creditors through a debt relief service gives you a good shot at obtaining debt relief while avoiding bankruptcy. This is your only option when home equity loans and balance transfers do no good because of poor credit. If you are ready to take the first step to becoming debt free today call now or fill out our 1 minute form to get started.