A debt consolidation loan is a great way for individuals with bad credit to get their finances on the right track. This is because combining multiple debts into a single loan will help you manage your loan easily and focus on being debt free. However, most people with bad credit are never sure whether they can qualify for debt consolidation loans from major financiers. Here are 5 ways in which you can consolidate your debt with a poor credit profile.
Secured debt consolidation loan
If you own assets, you can consider borrowing a loan against these assets to consolidate your multiple debts. With a secured loan, your home equity or car will be used as collateral by the lender to guarantee your loan. Using your assets may put your property at risk, especially if you default on your loan as the property will be seized to settle the debt. However, it will make it easier for you to get a loan with your bad credit profile.
Opt for a cosigner for your debt consolidation loan
Most reputable financiers will not offer debt consolidation for consumers who have bad credit. However, your loan application can be approved if you have a co-signer who has a good credit rating. However, you must ensure that you also get a financier who accepts co-applicants. You can get a family member or a spouse with excellent credit scores and is willing to cosign the loan for you as it will increase your chances of getting the loan.
Choose debt consolidation lenders who offer low minimum credit scores
Individuals with low credit scores should not assume that they can never get credit from most financiers. This is because lenders have varying credit requirements and some will lend to individuals with poor credit scores. If you research thoroughly and read creditor reviews, you will find financiers who will offer debt consolidation loans with your bad credit. However, you should remember that a low credit score can attract higher interest rates. When you calculate your debt, you will know what you owe and will be in a better position to find a suitable lender. This can be achieved by carrying out comprehensive debt reviews.
Credit union for debt consolidation
Credit unions are non-profit organizations whose main objective is to serve the community. Credit unions usually provide less conventional products and may offer consolidation loans for individuals with poor credit. You should confirm with the national or local credit unions to check out the options available for your credit rating. You may be lucky to find personal or debt consolidation loans that are meant for people who have poor credit like you. This will help you pay your loans and get more affordable monthly repayments with lower interest rates.
Most people who have a bad credit report can still get a debt consolidation loan. This is because creditors vary in their willingness to give loans to individuals with poor credit. If debt consolidation is the only option that you have left, you can directly consult with your bank first. You may end up getting a lower interest rate because of the relationship that exists with them. With a little research and patience, you will find a creditor who will give you a loan irrespective of your poor credit profile.