How to consolidate debt with bad credit.
While debt consolidation works for some consumers, people who want to consolidate debt with bad credit may find their options limited.
The strategy behind debt consolidation is to take out one new loan to pay off multiple old loans. If the new loan has a lower interest rate than the combined interest rates of the existing debts, you can potentially save money on interest, pay off your loans faster or reduce your monthly payments. But that strategy won’t necessarily work when attempting to consolidate debt with bad credit.
When you try to consolidate debt with bad credit, you may not qualify for that low-interest loan that makes debt consolidation appealing. If your credit score is low to poor, rates on debt consolidation loans may be as high as 30%, making the strategy unworkable. And even if you find a decent interest rate, debt consolidation with bad credit may not be the most effective choice for paying off debt and staying out of debt for good.
When considering whether to consolidate debt with bad credit, it’s wise to get the objective opinion of a financial expert. A certified credit counselor, for example, can help you decide whether debt consolidation for bad credit makes sense, whether a debt settlement agreement is a good idea, or whether there are other more effective ways to pay off your debts.
ACCC: helpful advice on whether to consolidate debt with bad credit.
At American Consumer Credit Counseling (ACCC), we offer free credit counseling and low-cost debt services that can help you determine the best way to get out of debt – and how to live a life free of debt in the future.
Our highly trained and certified credit counselors are available six days each week to help you evaluate your finances, review your options and make a plan to get out of debt that works with your budget and your financial goals. In your free credit counseling session, rather than counseling you to consolidate debt with bad credit, we’ll share with you a variety of alternatives strategies for paying off debt based on your financial situation. We’ll also point you to a wealth of information about managing money and credit counseling online. We can also answer questions about government debt consolidation programs for student loans, and about the pros and cons of working with a credit card debt consolidation company.
Debt management: a better way to consolidate debt with bad credit.
Rather than trying to consolidate debt with bad credit, we often recommend a debt management program as an effective way to get out of debt within 60 months. With a debt management program, you’ll consolidate debt payments rather than actual debts. You’ll also work with our credit counselors to create a budget you can live with and develop skills for managing money that will help you avoid debt in the future.
Learn more about a debt management program to consolidate debt with bad credit.