Do you have bad credit? Do you have a lot of debt? If you answered yes to both questions, a bad credit consolidation loan may be for you. It is possible to repair your bad credit. It’s just harder to do this if you’re drowning in outstanding debt.
Paying off outstanding debt is one of the best ways to boost your credit score. Starting fresh with an account consolidation loan that you pay off regularly will further improve your creditworthiness.
It wasn’t that long ago that having bad credit meant getting a new loan impossible. Look around today and you will see that there are plenty of financial institutions competing with each other to lend money to people with bad credit. So many people have been affected by the Great Recession that even people who once had real credit are now forced to find ways to rebuild their creditworthiness. Where there is such a high demand, there is certainly supply. And it does.
If you have the means to repay a debt consolidation loan, these financial institutions offer packages that are right for you. Getting a loan with a bad credit history will not only help you pay off some or all of your old debt, but you will also keep your new loan payments current. This will greatly improve your creditworthiness.
Once you have repaid the consolidation loan, you should be debt free. Your credit will be solid again. With this type of loan you can take a shortcut to a healthy creditworthiness.
Today, your rating now only affects your ability to obtain credit; it is also used by some employers to make hiring decisions. This has always been the case in most financial sectors, but now it is popping up in other employment arenas.
Credit ratings can also be used to determine your eligibility to rent an apartment.
If you’re behind on payments, a creditor may even ask you to cash in your investment stocks and insurance policies to repay the debt. This will strip you of any financial safety net you had to protect your future.
Credit card debt is known for taking longer to pay off based on the time you’ve already paid. Minimum payments limit the debt and end up costing you more interest in the long run, provided the minimum payment pays back the principle at all.
A bad credit consolidation loan will certainly incur a high interest rate because of your creditworthiness. You will pay much more over time than you initially borrowed. However, the longer terms of these loans mean that the monthly payments will be lower than the multiple payments you are currently making.
Choosing between bankruptcy and a bad debt consolidation loan is easy if you can make the monthly repayments. The debt consolidation loan will improve your rating almost immediately. Bankruptcy will further destroy your credit for many years to come.
The cost of the additional interest you pay on a bad debt consolidation loan is much lower than the lasting effects of bankruptcy.
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