Bad Credit - Consolidation

Bad Credit Consolidation
Unsecured debt consolidation loan bad credit

Many people with bad credit consider getting unsecured debt consolidation loans as a means of fixing their credit and paying off their debts.

A debt consolidation is a loan in which the lender pays off all or most of a person’s debts with a loan. Debt consolidation loans can improve a person’s credit record because they pay off debts. This can make it easier for a person to get loans, mortgages and credit cards.

An unsecured debt consolidation loan is a loan in which no collateral is involved. Many debt consolidation loans are home loans or second mortgages that use the equity in a home to pay off outstanding debts. One advantage to an unsecured debt consolidation loan is that doesn’t affect the equity on a home and doesn’t increase the mortgage payment.

Where to find unsecured debt consolidation loans

Fortunately there are quite a few companies that offer unsecured debt consolidation loans to people who have bad credit. Most of these companies have websites and welcome online customers. Many of these websites are easy to use and easy to find. One great advantage to these websites is that many of the lenders don’t run credit checks.

What to avoid in unsecured debt consolidation loans

Persons who are applying for unsecured debt consolidation loans should make sure that they are only getting a loan. Many of the debt consolidation plans offered online try to get people to sign up for services and products that they don’t need. Nobody needs to end up paying extra for a service or product that they won’t use.

Many debt consolidation plans offer “credit counseling” services that are a waste of money. Most of these credit counselors simply give people advice they already know such as telling them to pay off their debts and not spend more than they have. Nobody should pay extra for such advice, or for counselors who are simply phone operators. Quite a few counseling services simply hire people off the street to answer the phone and read scripts and call it “counseling.”

Another “service” people seeking unsecured debt consolidation should be aware of is credit protection or credit repair. This usually consists of the loan company running a credit check and challenging items on the credit history in an attempt to improve the person’s credit score. Borrowers should be able to do this for themselves by running a free credit check and challenging false items in the credit report.

Requirements for unsecured debt consolidation loans

The main requirement a person will need to get an unsecured debt consolidation loan is a verifiable source of income. Anybody who has a good job, a government benefit, a pension or a business with a good cash flow should be able to get an unsecured debt consolidation loan. The debt consolidation lender will probably require the borrower to present proof of this income in the form of bank statements or pay stubs.

The other requirement a person will face when applying for an unsecured debt consolidation loan is to sign some sort of payment plan. Generally, these loans will have to be paid off in monthly installments similar to those used to pay off mortgages and car loans. Many of these repayment plans are quite strict but an advantage to them is that the payments maybe lower than the debt payments.