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How to get a debt consolidation plan with bad credit

[vc_row][vc_column][vc_column_text]Consolidating debt with a single loan is a good way to pay off your debts with little interests. You can borrow money to pay off your debts with debt consolidation loan and the loan comes with more favorable terms.

Debt consolidation loans with the good terms are, however, reserved for borrowers who have excellent credit, but there are some people who focus on giving debt consolidation loan to people with bad credit.

These debt consolidation loans are available through online lenders and credit unions and the interest rate can be high.

To qualify for debt consolidation loan with very low interest rates, you need to have a good credit score and they may require a credit score of 700 and above, with the interest rates ranging from 5.99 to 35.99 percent. Lots of them may approve borrowers with lower credit in the 640 to 699 but will likely charge high interest rates.

There are some good places to look for debt consolidation loans and they include;

Local credit union

Credit unions are non-profit organizations owned by their members, so they offer loans with better terms compared to traditional banks. They can also lend to members who have poor credit record. You can talk to them if you are a member as they will look beyond your poor credit score and focus on your general financial history, relationship with them and personal circumstances.

Online lenders

There are online lenders you can try such as Avant and Lender’s club if you have a bad credit record as they do not focus on that when you apply for loan. This even allows you to compare rates and receive the funds within a week.

Home equity

If have an equity on your home, you can as well take a home equity loan to consolidate your debt. Although it is not seen as a debt consolidation loan for bad credit, but it can offer you a low interest rate. But if you do not pay back on time, the lender can foreclose on your home to get the loan amount. So you have to ensure you will repay on time before you take it.

Note that some of the debt consolidation lenders are predatory in nature, and will often charge very high interest rates. Avoid them as this will make you go into more debts while trying to clear the previous one and it doesn’t serve the main purpose of debt consolidation loan which is aimed at helping you pay off your debts.

 Steps to getting a debt consolidation loan for bad credit

To get a debt consolidation loan, here are some steps you have to take. If you’re trying to stay out of debt and you think a consolidation loan will help, below are some tips that will help you find the right loan and increase your chances of approval.

  1. Wait and improve your credit

If after searching you still cannot find a loan which will help you save money, you have to improve your credit score before you continue searching. Ensure you pay off your monthly debts and also pay your credit card balances to reduce your credit utilization rate as this will increase your credit score.

If you find out that your credit report has errors report it to the agencies. Building your credit will take a lot of time but you just have to keep trying and paying off your debt.

  1. Check and monitor your credit score

Lenders check your credit score before approving your application for loan and the lower your credit score, the higher the interest rate. The lender may reject your application if your score is below his minimum requirement. You need to have a knowledge of your credit score before applying.

  1. Consider a secured loan

Debt consolidation loans that are unsecured do not require collateral like mortgage or car. But if you can’t seem to get that easily, you can consider a secured loan and they require some collateral such as home, car, or other assets that can cover the amount you are borrow.

  1. Look around

Take your time to look around and weigh other options before settling for the one you consider as the best. It is quite easy when you are using online lenders.  Also compare rates and fees as well as the repayment conditions which can affect the cost of the loan.

  1. Consider a secured loan

Debt consolidation loans that are unsecureddo not require collateral like mortgage or car. But if you can’t seem to get that easily, you can consider a secured loan and they require some collateral such as home, car, or other assets that can cover the amount you are borrow.[/vc_column_text][/vc_column][/vc_row][vc_row el_class=”seo-link-sec”][vc_column][vc_empty_space height=”50px”][vc_column_text][slick-slider category=”28″ design=”design-5″ speed=”2000″][/vc_column_text][/vc_column][/vc_row][vc_row el_class=”call-out-sec stretch-sec” css=”.vc_custom_1568018042545{background: rgba(0,0,0,0.88) url(https://imbonline.co.uk/wp-content/uploads/2018/07/counter-wrapper.jpg?id=1382) !important;background-position: center !important;background-repeat: no-repeat !important;background-size: cover !important;*background-color: rgb(0,0,0) !important;}”][vc_column][vc_column_text]

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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