Consolidating credit card debt 20
Recently, a number of newer non-bank financing companies have started offering consolidation loans for those with bad credit.
Since they don't have a huge branch network to support and often operate only online, these finance companies are able to offer loans (which can be used for debt consolidation) to borrowers with scores less than 640.
Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt.
Let’s say you have ,000 in unsecured debt—think credit cards, car loans and medical bills.
Consolidating debts into one loan used to mean “let’s pull money out of our home equity line and pay off the creditors” – and then the housing market collapsed, and with the collapse of the housing bubble came the end of the HELOC games.
Now it works a lot like it should have worked before: you get a loan based upon your credit score, at a rate based upon your credit score, and, unlike before, you use money that you actually have (or money that you’re making) for payments.
Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.
Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low.
If you're stuck with debt (especially high-interest, 29.99% credit-card-type debt) and a bad credit score, not all hope is lost though!Here are the top things you need to know before you consolidate your debt: But here’s the deal: Debt consolidation promises one thing but delivers another.That’s why dishonest companies that promote too-good-to-be-true debt-relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.You’re in deep with credit cards, student loan payments and car loans.
Minimum monthly payments aren’t doing the trick to help nix your debt, and you’re flippin’ scared.Pay attention here, because these crafty companies will stick it to you if you’re not careful.