Bad credit debt consolidation is a process of cleaning up your credit. In order to do this, you will need to have some means of consolidating or lumping together all of your debts into one, larger payment. There are two main ways to do so, and your unique situation will define the best route for you to take.
For many people, making this move is the best route to take to get an improvement in credit score and therefore get better financing in the future. Take into consideration the options that you have.
Bad Credit Debt Consolidation: Loans
One way that you can consolidate your debts is to use a loan. It may seem strange to think about paying off your debts with a new loan, but for many people, this is an option. One way to do so is to tap into the equity you have in your home. Equity is the value of your home that is remaining un-mortgaged by any loan. If you borrow this way, you do put your home at risk for your bad credit. Debt consolidation like this is, though, one of the least expensive routes to take.
Another option for bad credit debt consolidation through loans is with the use of a personal loan. Some lenders may offer this unsecured loan to you, depending on your credit score. Not many people will qualify for this type of loan, especially if your credit score is poor. Therefore, it may not be an option for everyone.
Bad Credit Debt Consolidation: Counseling
Another way to consolidate your bad credit is through counseling services. These services will work with you and your lenders to come to an agreement on a repayment terms. Often, these debt consolidation companies will reduce or eliminate your interest rate, reduce your amounted owed and they may help you to pay less per month on these debts.
The goal here is to place all of your debts into one lumped together debt. Then, you will work to pay those debts off through the counseling agent with one, monthly payment. For those in serious debt trouble, this is the best route to go.
With bad credit debt consolidation, the goal is to improve your credit situation by working to pay off the amount you owe. Your debt does not disappear, but it is restructured to help you make payments easier and to help you improve your financial situation considerably. Many people find that consolidation is the only option for them to improve their financial futures and lives.