Bad Credit Debt Help & Debt Consolidation Loan

Written by: A Licensed Insolvency Trustee

Debt consolidation loans to clear up bad credit

The concept of consolidating your debt to maximize your ability to pay it down more quickly is standard in the debt industry. After all, it’s basic math that obtaining a debt consolidation loan will make your monthly payment more effective so you can get out of debt faster. When you are trying to juggle your debts it’s hard to know if you will be approved for a consolidation loan with bad credit, or even if it’s the right thing for your unique situation.

A Licensed Insolvency Trustee is a professional that has the knowledge and expertise needed to help you find the solution that is best for you, under your unique circumstances. The initial consultation they offer is free and no-obligation.

Signs of bad credit

Many people instinctively know when they have bad credit and may be leery about approaching a bank to get debt help. Generally, if you are getting frequent collection calls, if you have a history of missed or late payments, if you are struggling to make payments then chances are your credit score is low.

Debt consolidation is a good first step to gaining control of your finances. Before you start the loan application process there are some things you should first consider.

Preparing for your Application

Start by gathering as much information as you can about your debt. You need to make sure that you are including everything that you owe in your debt consolidation. Make a list of your debts including who holds the debt, your account number, and the amount owing. It may also be a good idea to complete a credit check to make sure there aren’t any other debts that are outstanding of which you are not aware.

Next, you need to understand how much you can realistically afford. Banks and lenders do not always take the time to consider whether the loan payment is affordable. Make sure that after paying your basic living expenses, and allowing for some money to be put away for annual or extra expenses, you know how much you can afford to pay on your consolidation loan monthly.

If you need help understanding how to manage your money or how to set up a budget then consider seeking the assistance of a debt counsellor or budget counsellor. They can help you address any issues that you have with money management skills to be sure that your consolidation is successful.

Consolidation loan basics

There are several types of lending institutions available that would offer a debt consolidation loan as part of their product line. Not every institution will offer a loan that meets your needs.

Always start with your bank as they can see your financial history and have a record of your income coming into your account each month. Generally, major banks offer the most competitive interest rates even if you have bad credit. The banks will look at your debt ratio, your income level and your credit score when considering your loan application. Sometimes, even with a poor credit score you may still qualify if you meet the other lending criteria.

If your credit score is a factor then you may need to consider a co-signor. Asking a friend or family member to co-sign on a