If you’re faced with considerable debt, you may have started looking for a path towards financial recovery. While weighing your options, you see that there a lot of debt relief strategies available to you. From debt management to debt consolidation, there’s a lot to consider. But how can you tell which option is the best fit? This article will help you better understand debt consolidation, and specifically debt consolidation with bad credit.
Debt Consolidation with Bad Credit
You may have asked yourself: does debt consolidation work? To figure that out, it’s important to take into account your specific financial situation. Some factors include how much debt you’ve accrued, any damage to your credit score, and whether you’re ready to address how you fell into debt in the first place. The more honest you are about your debt, the easier it will be to overcome it.
Debt Consolidation Options
Debt consolidation can help you better manage your unsecured debts. To put it simply, debt consolidation takes all of your outstanding loans and combines them into one. Debt consolidation can be a good solution if you’re having trouble keeping track of a number of due dates and balances.
One way to consolidate debts is to take out a sizable consolidation loan to repay creditors. This may seem like an attractive option, especially to those looking for a quick fix. Unfortunately, debt consolidation loans can lead to even more financial trouble. To be beneficial, your consolidation loan would have to save you money. It seems simple, but consumers with bad credit are unlikely to qualify for premium interest rates. And, poor credit generally goes hand in hand with excessive debt. Fortunately, there are alternatives to debt consolidation loans for bad credit.
Debt consolidation through a debt management plan tends to be a safer option. When you call a non-profit credit counseling agency like American Consumer Credit Counseling (ACCC), a certified counselor will help you review your finances and come up with a solution. Often times, that solution is a debt management program. Similarly to debt consolidation loans, a debt management plan (DMP) will help you consolidate your debts into one monthly payment. But, agencies like ACCC help you do so without taking out another loan. If a DMP isn’t for you, counselors will provide you with other options best suited to your specific situation.
Debt Consolidation & Bad Credit
Debt consolidation with bad credit isn’t impossible. And having bad credit doesn’t mean that you are out of options. However, it does mean that you have to be even more careful about choosing a debt relief strategy. As we saw with consolidation loans, some companies exploit the vulnerability of those in debt to make a profit. If you do decide to consolidate your debts, search for a reputable debt consolidation company like ACCC that has your best interest in mind.
And, if you’re on the path towards debt relief, it’s a good idea to know your credit score. AnnualCreditReport.com allows you to pull your report for free, and will help you assess the extent of your credit problems.
If you are seeking debt assistance speak with a certified credit counselor at American Consumer Credit Counseling today at 800-769-3571!