Recommended – Debt Consolidation Option For Bad Credit
Debt Consolidation Loans and Option For Bad Credit from Adverse Staus
Realising that you have a bad credit rating can be disheartening for some, especially when you are wanting to take the steps to gain control of finances and pay off your multiple debts with a loan. Those used to having a good status rating, will often apply for a debt consolidation with their own bank or high street lenders. The problem with these lenders is that they have a certain criteria when it comes to lending and will only consider applications from those with a good to perfect staus score – therefore those applying with a bad credit rating are declined a loan, which further impacts the borrower’s credit rating.
However it is useful to know that there are lenders that do consider applications from those with a bad credit rating. They take into account other items, such as your income and whether figures show that you can actually afford to repay your debt consolidation loan without relying on the fact that you have a bad credit rating. As these lenders are taking a risk, they will charge higher interest rates than those that would be available to you should you have a good credit score. That said the overall cost of the loan, is usually a lot cheaper than the interest that is currently being paid of different multiple debts.
Therefore if your credit score has taken a hit due to late payments, there may still be an option for you to borrow. Once you have been approved for a debt consolidation loan, you will have just one monthly affordable amount to repay each month. If you keep on top of your repayments, and are never late or miss one, you can also start to rebuild your credit rating.
Rebuilding your credit score means that there will be cheaper finance options available to you in the future should you need to borrow again. A good credit rating can also mean better mortgage deals, loan deals and credit card deals. Once you have rebuilt your credit score it is important to protect it by making sure you adhere to your credit agreements and repay any finance during the time specified.
Likewise if you miss repayments of fail to repay any amount owed on your debt consolidation loan, you will suffer a worsened credit rating. If you are unable to repay your debts there are other solutions that allow you to come to an agreement with your creditors without the use of further finance. The most usual is debt management, which is an agreement with you and your creditors to repay your debts at a reduced rate each month. A debt management advisor works out your income and your expenditure to determine how much money you have left over each month to repay your debts.
You credit score will remain bad for the remainder of the plan until the debts are paid off, after this time, you will have to work again to rebuild your credit score. The only way to achieve this is to borrow and pay back on time and in time.