In tough economic times, you can easily end up with changes to your credit score. While you might not end up fired, the possibility of pay cuts and other financial changes are a distinct possibility. When you have faced trouble financially and it has impacted your credit score, finding a solution that can help you with the struggle to pay back your debts might seem hard. Fortunately, consolidation can help provide you with some needed relief.

Consolidation Loans:

If you have bad credit, then a consolidation loan might not be the best solution to your financial situation. Bad credit scores will always impact your eligibility for a loan and usually affect the interest rates dramatically.

The bad credit lenders that suggest you can still qualify often take advantage of your situation. You might qualify for the loan, but you will also pay more than you expected to obtain the funds.

As a general rule, consolidation loans are expensive. If you do not have excellent credit scores, then traditional lenders are unlikely to offer you funds. The traditional lenders are likely to feel skeptical of your ability to repay the loan and will have strict cut-offs for credit scores.

Those who do offer funding when faced with bad credit will help balance the unsecured loan by requiring a high interest rate. These are usually non-traditional lenders like peer-to-peer lenders who are interested in making a large profit from your debts.

The loans are available but usually are not worth the added cost. As someone who is struggling with bad credit and high interest debts, you might not qualify for a low enough interest rate to make it worth taking out the loan in the first place.

Interest Rate Possibilities:

The interest rate is usually dependent upon the lender, the current market and your credit score. If you have a low credit score, then you are likely to find that the interest rates are not worth consolidating because it either does not lower the rate or it even increases the rate.

Bad credit will eliminate traditional lenders. Banks are not usually willing to offer loans to those who are struggling with other debts and generally have a cut-off limit. If you have bad credit, then you need to look for non-traditional lenders.

Peer-to-peer lending is a possible solution, but you will need to expect to pay a reasonably high rate. Even average credit ratings are often charged around 15 percent when the closing costs are factored into the rate.

Those who have bad credit should expect to pay between 20 and 30 percent for the consolidation loan. In some situations, the lenders might even require a rate as high as 35 percent to provide any funds. Even with bad credit, the original debts are not likely to exceed 20 to 25 percent unless it was a debt for bad credit. That means that the new loan will either end up breaking even with the original loans or might even exceed the original interest rate so that you end up spending too much.

Alternative Solutions:

A bad credit score does not necessarily mean that you have no options available. While you do not want to procrastinate until your situation becomes dire, you can get better rates for your debts. The best solution is working with your current creditors and a negotiation service to get your finances back on track.

Consolidation is not always about taking out a new loan. You can negotiate with your current creditors and work with a consolidation service to get a single payment that has a lower interest rate and lower fees. This will have the same impact as taking out a loan, but it does not require that you have perfect credit to get a reasonable rate.

Another option when you are struggling with unsecured debts is settling the account once and for all. Debt relief companies that provide consolidation services through negotiation will also provide settlement options.

Settlement is not the same as consolidation. Instead of working on reducing the interest rate, you focus on reducing the principal and making a single payment that results in a complete debt reduction. The professionals who are negotiating on your behalf will ask the creditor to accept a lump sum of cash and consider the account paid. This will pay off your debt and often can save you thousands off the principal amount.

Negotiation services that help settle or consolidate do not require a good credit score. You do not need to worry about your bad credit impacting the decision to help you.

Bad credit does not mean that you are only faced with high interest loans. When you need help with debts you can turn to professional negotiators in a debt relief company.

Are your credit cards maxed out? Just making minimum payments or behind on your bills? Let National Debt Relief help you get rid of your credit card debt. We offer a successful alternative to bankruptcy, credit counseling or taking on new loans. This program has saved our clients over $100,000,000 dollars. Before you make your next credit card payment, talk to us.

Are your credit cards maxed out? Just making minimum payments or even behind on your bills? Let National Debt Relief help you get rid of your credit card debt. http://www.nationalrelief.com/ We offer a successful alternative to bankruptcy, credit counseling or taking on new loans.

Author Bio: Are your credit cards maxed out? Just making minimum payments or behind on your bills? Let National Debt Relief help you get rid of your credit card debt. We offer a successful alternative to bankruptcy, credit counseling or taking on new loans. This program has saved our clients over $100,000,000 dollars. Before you make your next credit card payment, talk to us.

Category: Finances
Keywords: debt,consolidation,loans,bad credit,