In these tough economic times, it really is becoming difficult for people to manage their finances. Businesses aren’t as profitable as they used to be, there are decreases in ROIs and on top of that there are lesser potential job opportunities. In such difficult times, people often opt for loans which fixes their financial issues for the moment but in the long run, it just makes things worse especially because of the interest that they have to pay. Now, if you are someone stuck in such a situation then a bill consolidation loan for poor credit is the right solution.
How Does Bill Consolidation Work?
Consolidating your debt means taking a personal loan to roll all your other loans into one. Mostly, these debt relief programs offer unsecured loans which means that you won’t have to come up with collateral.
However, it’s not as simple as it seems and it’s more like a strategic move to manage your finances so you have to choose the right program. Your main goal should be to choose a loan that comes with a lower interest rate. For this you need to have a good credit history but if not then there are lenders out there who specialize in loans with bad credit.
What’s The Criteria To Qualify For Bill Consolidation?
For someone with a good credit score, it’s easier to get debt consolidation loans with lower interest rates. But for someone with a bad credit, things can be a little trickier.
Here’s how you can qualify in such a situation;
- Search for some of the best debt relief companies that can lend you a loan even with a bad credit. There are lenders out there who will not only give you a loan but will also help improve your credit history.
- Try to opt for a secured loan where you can provide some sort of collateral to reduce the lender’s risk.
- In order to get your loan approved, ask someone with a good credit score to consign your application.
- Try to improve your credit score a bit before applying for the loan. You can do this by paying your monthly bills on time and using less of your credit.
Will Debt Consolidation Really Improve Your Credit Score And How?
In the initial stage, yes debt consolidation will affect your credit score a bit because basically you are applying for a new loan. However, if you manage your bills on time and try to pay them off before the due dates then yes, your credit score will improve.
Lesser Credit Utilization
The wiser thing to do is to get yourself a balance transfer card that has a high limit and then you just transfer your balance from credit card to that card. In simpler words, when you reduce your credit utilization rate, it will automatically improve your credit score.
Make Your Payments On Time
Your FICO score relies on your payment history and it’s very simple to understand that the sooner you make your monthly payments, the better your score will be. It should be one of your top most important priorities every month to pay the debt off with interest timely.
What Not To Do When Consolidating Your Bills?
In the credit card debt consolidation loan, there are a few things that you have to be careful about. Starting with;
- Make sure that you are able to pay your monthly amount right on time. Missing even a single payment will mess up your plan and it will come with even worse consequences.
- Get to the depth of the source of your debt. It’s a wiser decision to opt for a consolidation loan but remember that it’s not some kind of a magic that’ll make you debt-free. You should always know the root cause why you ended up in debt in the first place. It can be anything, from overspending to not living within your means. Just figure the cause out and then work on it first.
- Opting for the longest term will be another huge mistake you’ll make. Yes, it does reduce the monthly amount that you have to pay back but in the longer run, you’ll end up paying higher interest than you are supposed to. In simpler words, it’ll just make your debt more expensive.
- If your consolidation loan for bad credit gets approved, congrats! But be very careful about your expenses and how you manage your finances otherwise you’ll end up in a deeper debt. Don’t apply for more loans and don’t bring down your credit card balance to zero once you are into your “become debt-free” mission.
Is It Possible To Achieve Financial Freedom With Bill Consolidation?
The answer to this question all depends on how you manage your funds, your credit score and of course, your expenses. For someone who really does want to become debt-free in a shorter time span, yes, bill consolidation really is the wiser more. But if you are just expecting to pay off your existing loans and get more loans then no, this isn’t what you should be opting for or it will lead you into hot waters.
You have to be very clear and precise about your goal. Do your research properly and look for as low interest rates as possible, pay your monthly amount on time, don’t go for a longer payment plan and just cut down on your expenses until you are free from any sort of debt. It’s the hard work and dedication that will help you achieve complete financial freedom. If you’ve made up your mind and really want to get started on this journey then try Mountain Debts Relief. Here you’ll get the best consultation with the best consolidation plans even if you are stuck with a poor credit history. Contact Now!