There is a general perception that debt consolidation for people with bad credit is not possible. Most of the people think that the 1st thing which banks do on receiving a debt consolidation proposal is to check the credit score of the individual. While this might be true for quite a few banks but there are other solutions with the help of which, you can consolidate your debt even when you have bad credit.
How can I consolidate all my loans if I have bad credit?
We will today share with you four different options which you can utilize when it comes to consolidating your debt in spite of your bad credit score.
1. Debt Consolidation services:
There are dedicated debt consolidation services which work with individuals having a bad credit score. Even though the fees of the services can be on the higher side but they can surely increase the probability of debt consolidation irrespective of your credit score. It is a good idea to always read the fine print before availing their services.
At the same point in time, you have to ensure that you are hiring the debt consolidation company only for debt consolidation and not for debt settlement. Both of these are widely different options. In debt settlement, the bank or the financial institution will agree to accept a lump sum payment to close the loan. In debt consolidation, you will be opting for a larger loan to pay off all your outstanding loans.
With the help of debt consolidation services, it is easier for you to avail such a loan in spite of having not so perfect credit score.
2. Peer to Peer lending:
There are numerous peer to peer lending platforms online these days. These platforms lend plenty of money by acting as a mediator between the lender as well as the borrower. The credit score requirement is generally much less stringent on these platforms. Moreover, each lender will contribute only a small amount towards your loan. There are numerous such platforms to choose from in order to avail a debt consolidation loan. Some of these platforms include:
3. Co-signed Loans:
If most of the banks are rejecting you due to low credit score, you can get a cosigner for your loan. If the credit score of the cosigner is good enough, there is an increased probability that you will be able to get the loan. However, finding such a cosigner is not an easy task. Co-signers are also known as guarantors. You have to approach your family and friends in order to find a trusted cosigner. With the help of the cosigner, getting the debt consolidation loan is certainly a much easier task.
4. Collateralized loan:
Most of the people do not like to pledge their assets in order to opt for debt consolidation. You need to keep in mind that if you’re not able to make your monthly payments, the interest, as well as the penalties, will keep on increasing. In such a case, you might lose those personal assets eventually either way. A much better option is to pledge those assets in order to get a collateralized loan. The loan against any collateral is often at a lower interest rate. Also, since the loan will be based on the price of the asset, your credit score will take a backseat. Some of the banks providing such collateralized debt consolidation loans include:
• Sainsbury bank
• US bank
Most people find it difficult to pledge things to which they are emotionally attached. However, in order to bring your finances back on track, collateralized loans are one of the best options. You can pay back that loan and free up your asset.
Thus, up until now if you have been wondering how can I consolidate all my loans if I have bad credit, these are the 4 options which you have. While not each and every one of these options might be applicable in your case but you will find that at least one option is applicable in your case.