Debt Consolidation Despite Bad Credit
So, you owe money!! Did you know that puts you among the majority of Americans
? Yes sir!! It is official! 56% of Americans carry a balance of some sort that is owed to a bank. But then, if you are reading this article, you do not seem to be doing very well coping with it, are you? This article is about debt consolidation. It speaks to a situation that is pretty tight really and how you can improve your situation via debt consolidation!
I hear something like, My debt is not only already proving to be a problem to service, I also have a pretty bad record as evidenced in my credit score. Well, I hope I could respond, no problem at all! Unfortunately I cant say that!. But lets see what we can do to address your situation.
What you really need is a debt consolidation service. To start at the beginning, you should understand that debt consolidation essentially means you put various small loans and credit card balances into one bucket so that it becomes easier to manage. In the process, you also try to reduce your interest burden. You get to move your loans from the usually exorbitant rates charged by credit card companies to the more reasonable rates applicable to regular loans
When you say, consolidate my debt, what you are really saying is I need to re-structure your debt, on easier terms, possibly from a new lender. But it is important for you to understand that Debt Consolidation comes in many shapes and flavors. You have:
1. debt consolidation loans via a refinance loan,
2. credit counseling
3. debt settlement.
4. debt management plan
5. debt settlement, etc
But lets just focus on the simpler form of taking a new loan to liquidate all or most of other, older loans in other words, a debt consolidation loan.
First off, let me say that a debt consolidation loan works best if a major part of your debt is credit card debt. This often called credit card debt consolidation. The very short term and high cost nature of credit card debt makes it very amenable to the benefits of consolidation. The credit card has served its purpose it has given you credit at your convenience and without much hassle. But it is not designed to serve you for longer terms. When you want to convert it to a longer duration, it is best to consolidate the debt.
Some of the potential benefits of credit card debt consolidation are:
Becoming debt free in 24-48 months
Reducing debts to as low as 50% of what you owe
A better alternative to Bankruptcy, Debt Consolidation or Credit Counseling
Shifting to a single (lower) monthly payment.
Of course, having a bad credit score complicates the situation and reduces the potential benefits. However, you have three variables to play with:
1. The equity on your home that is the amount by which the value of your home exceeds the amount you owe on it
2. The actual credit score obviously the lower your credit score the more difficult it is to get an attractive debt consolidation package.
3. Your current debt to income ratio the lower your debt today is, as a percentage of you income, the better your chances.
This means if you are weak on any one of the above parameters, you can potentially make-up by leveraging your strengths on others, as lenders typically try to balance the three risk factors to arrive at the best package they can offer you.
Again, the attractiveness of your new debt consolidation loan will be affected either through lower loan amount availability, a higher interest rate or a shorter duration of the loan. You would be well advised to ask Bill at Bills.com for more specific advise on this.
I wish you good luck!
by: Ask Bill
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