Consolidating student loans lower credit score
While a debt consolidation company is a great option to consolidate debt with bad credit. You will just have to call each creditor to close your account, explain your financial situation and negotiate the rate down and set up a monthly repayment plan.
If you own your own home and have built up equity you can use that equity as collateral for a loan.
If you have low average to bad credit (below 660 credit score) you may still qualify for a debt consolidation loan but the interest rate will be high.
Rates can be as high as 30% in some cases defeating the purpose of a debt consolidation loan.
So, if you have bad credit what are your options for consolidating your debt? Transactions are not always black and white, relationships play a big part in a credit union.
By paying off all of those high interest debts with a single low interest loan you can get out of debt much quicker and cheaper.
There are other ways to get out of debt besides through a debt consolidation loan.
Which is great news for people with bad credit who have trouble getting approved.
A debt management plan, or DMP, is offered by credit card debt consolidation companies. What happens in a DMP is your cards will all be closed.
The company you choose to work with will negotiate your interest rate down and set up a repayment plan. You will pay one fixed monthly payment to the consolidation company that is then dispersed to your creditors, minus their fees.