Bad Credit - Consolidation

Bad Credit Consolidation
Bad Credit Consolidation Loan

You can improve your credit rating and simplify your payment process with a bad credit consolidation loan.

A consolidation loan usually called a debt consolidation loan pays off all of your existing debts such as credit card balances. In exchange for this you pay off the loan usually with a higher rate of interest than on the normal loan. Lenders are willing to give a debt consolidation loan to a person with a bad credit rating if they are willing to pay a higher interest rate.

The way to determine if such a loan is for you is to get out all of your credit card and similar bills and look at them. Then get out your calculator and add up the amount of your debt and your monthly payments. Try and see how much you will have to pay to pay off your debts using your existing payment plans.

This way you will have something to compare the bad credit consolidation loan offers against. Tally up the amounts of the monthly credit card payments that you make and compare them to the payments on the debt consolidation loan. If the amount of the debt consolidation loan payments is higher than what you would pay on your existing cards it’s not a good deal for you.

Other alternatives

A better solution in such a case might be for you to simply pay more on your monthly credit card payments. One alternative might be to try and pay down your highest interest credit card first. Another might be to transfer your credit card balances from higher interest credit cards to ones with lower interest rates.

With the laws regulating credit cards in the United States, it’s probably not a good idea to open new credit cards at this time even ones with lower interest rates. Instead you should try and transfer credit balances to cards with lower interest rates. Be careful when you do this because such a transfer might cause your credit card company to raise your rates.

Another possible solution would be to contact your credit card company or companies via phone or e-mail and see if they’ll reduce your rates. If your situation has changed they might be willing to work with you to keep your business. Be careful when you do this because some credit card companies might be looking for an excuse to raise your rates.

It will soon be much harder for credit card companies to raise rates in the United States. So it might be cheaper and easier just to keep your existing credit cards and pay them off than to get a consolidation loan.