The Benefits of Debt Consolidation On Your Credit Score
In a time like today where there is economic uncertainty, the debts can start mounting up. If you already have bad credit then it can be a very difficult time. Missing payments can take an even bigger hit on your credit score. But there is hope. If you have bad credit and are looking for solutions then a Debt Consolidation Loan could be your saviour. While it can be difficult to be approved a loan full stop if you have bad credit, it can be even harder to find one with low-interest. Fortunately, there are options. In this blog, we discuss the benefits of Debt Consolidation and how it can actually improve your credit score!
Debt Consolidation allows you to keep track of your payments more easily and also reduce costs. This is because a debt consolidation loan ties all of your debts up into one. This means that you only have 1 payment to make and one fixed interest rate. Having only one payment to make has a number of benefits. One of these benefits is that you no longer have to worry about multiple creditors hassling you for money. It also means that rather than paying different rates for each debt, you only pay one (usually lower) one which can save you thousands!
Check out the benefits of consolidating your debt below.
Debt Consolidation And The Benefits You Could Gain
- Choosing to consolidate bad credit loans could secure a lower interest rate.
- You can improve your credit score consolidating debt. Packing your debts into one means less chance of missing payments, making you a more trustworthy borrower. You can also avoid multiple defaults as you will have to deal with only one payment.
- Your stress levels will lower due to not having to worry about an avalanche of payments that keep piling up.
- If you have a bad credit history, debt consolidation can raise your score and make you more likely to have a loan approved.
Types of debts that can be consolidated
- Credit cards or store cards
- Bills, rates or tax debt
- Personal loans or car loans.
How to consolidate your debt when you have a bad credit
Even if you have bad credit, there are lenders willing to provide you with the necessary amount of money to combine your small loan into a single, larger one.
An unsecured loan
Set up an appointment with a lender and find out how can an unsecured loan help your situation. Interest rates will be higher than normal, but with a good deal, you’ll start saving money and paying your debts faster.
A debt agreement
Similar to a form of bankruptcy, a Part 9 Debt Agreement will prove that you aren’t able to pay your debts at their current rates anymore. Even though it will go in your credit file history and could pose some problems in the future, it might be the best solution for restoring the balance of your finances.
You’ll talk to a financier that will discuss your situation with all your lenders. This ensures that any loan you’ve taken won’t accumulate any interest anymore.
If you’re thinking about consolidating your debt, you should first establish the nature of your loans. Also, you should be aware that the loan terms, fees, and interest rates vary according to each lender’s conditions. Finally, keep in mind that not all debt consolidation processes allow you to combine all your loans. So, the best thing to do is to look for various lenders, compare them and choose the best one for your financial needs.
Bad Credit Loans can provide you with the financial support you need. We offer bad credit debt consolidation with competitive rates. Speak to one of our specialists today and find out more about the benefits of debt consolidation.