Debt Consolidation If You Already Have Poor Credit

If you are dealing with debt consolidation with poor credit, then you already know that it is a bit more difficult to obtain. The whole reason that people need debt consolidation is to get them out of the debt trouble they have already gotten into. By being able to consolidate a couple of credit cards into one lower payment, you can pay off your cards off faster.

Credit Card Consolidation

One way that you can try to consolidate some of your credit card debt or other large bills is to consolidate it to one or two higher limit credit cards. This will only help with the consolidation if the interest rate is lower than your average interest rate. What you will accomplish is clearing up the smaller credit card accounts. Leaving that much less credit available for you to charge up and need to pay off. Some consider this way of going about credit consolidation bad idea. If you have the attitude and the belief that as you pay off each card that the account should be closed then using this method can work for you.

Line Of Credit Consolidation

If you own a home then a line of credit for your debt consolidation might be an alternative. The way this works is you are given a line of credit based on the equity that is in your home. You are only given a potion of the value, as most lenders do not allow a loan for 100 percent of the loan value. Typically the interest rates on home lines of credit are lower than the credit card rates or other loan rates. The terms on line of credit are also longer so the payment amount is cut down based on that as well. Again, each credit card will need to be closed so that you will not have that open credit available for you to charge up again. Doing so would then leave you with charged up credit cards and the consolidated payment of the previous card balances.

Personal Loans

With already bad credit a personal loan may be the hardest form of debt consolidation for you. If you are able to qualify for one you will need to ensure that the terms and the rate given are not worse than the terms on your credit cards. The whole point of consolidating the debt is to be able to pay it off in a reasonable amount of time at a payment that you can afford.

Debt consolidation has left some with very mixed feelings. In order for the debt consolidation to work the individual may need to go through debt counseling. You need to understand that you are not freeing up more spending money, you are trying to pay off debts so that you will have the cash available to pay for these purchases in the future without pulling out a credit card. Some good news is that if you are able to succeed in debt consolidation and keep your payments up without taking on any more debt, then your credit score will get better. This might allow you access to other loans and credit offers that are better than the current debt consolidation option. So even if you are not happy with the current form of your consolidation, if you are able to stick with it for a while then your credit can be fixed enough to obtain a more favorable option.

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